Loss of function of both alleles of the APC gene results in colorectal adenoma formation in familial adenomatous polyposis, an autosomal dominant genetic disorder leading to multiple colorectal tumors at an early age. Previous molecular studies indicate that the mutant cells forming dysplastic epithelium within adenomas are clonally derived. We show, using immunostaining and molecular techniques, that the dysplastic epithelium of adenomas actually contains a mixture of cells derived from both mutant and normal stem cells. Well-differentiated mucous cells in the dysplastic epithelium, one of the indicators of severity of dysplasia, were derived from normal stem cells. Carcinomas in these patients, in contrast, contained only mutant cells, indicating that the subsequent mutations incurred by these cells have led to their isolation from the normal population.