Neoplastic progression in human tissues appears to be paralleled by a series of genetic and epigenetic alterations. In human colorectal cancers, defect Wnt/beta-catenin/T-cell factor and RAS/RAF signaling pathways have a major contributing role in tumor initiation and progression. To date, much of the research on the consequences of beta-catenin activation has been focused on genes whose expression is believed to be activated by beta-catenin-associated T-cell factor-dependent transcription. Little is known about genes whose expression may be down-regulated secondary to beta-catenin activation. Using a subtractive suppression hybridization approach, we identified a gene with markedly decreased expression in rat RK3E epithelial cells neoplastically transformed by beta-catenin. Because expression of this gene was also down-regulated in RK3E transformed by several other oncogenes, the gene was named DRO1 for "down-regulated by oncogenes 1." Compared with corresponding normal tissues, DRO1 expression was found to be very reduced in colon and pancreatic cancer cell lines as well as in most colorectal cancer specimens. The predicted DRO1 protein contains three repetitive elements with significant similarity to the carboxyl-terminal regions of the predicted proteins from DRS/SRPX/ETX1 and SRPUL genes, suggesting the existence of a new protein family. Ectopic expression of DRO1 in neoplastically transformed RK3E or colorectal and pancreatic cancer cell lines lacking endogenous DRO1 expression resulted in substantial inhibition of growth properties. DRO1 was found to suppress anchorage independent growth and to sensitize cells to anoikis and CD95-induced apoptosis. Our findings suggest that inhibition of DRO1 expression may be an important event in the development of colorectal and pancreatic cancers.