The majority of colonic neoplasias contain mutations in either the adenomatous polyposis coli or the beta-catenin (beta-cat) gene, both of which result in elevated levels of cytoplasmic beta-cat. The oncogenic activity of beta-cat has been explored in vivo and in vitro with conflicting results. We tested the hypothesis that beta-cat is capable of immortalizing and transforming cultured epithelial cells that represent the precursors to colon cancer. A truncated form of beta-cat (deltaN89) was stably expressed in murine colonic epithelial cells that were conditionally immortalized by temperature-sensitive T antigen expression and contained a mutant ApcMin allele [Immorto-Min colonic epithelium (IMCE)]. IMCE cells, grown under nonpermissive conditions, were immortalized by expression of the truncated beta-cat protein as determined by sustained growth in culture and escape from senescence as measured by endogenous beta-galactosidase activity. IMCE neo cells at nonpermissive conditions underwent extensive apoptosis, an effect that was blocked by the expression of deltaN89 beta-catenin. IMCE beta-cat cells had significantly lower p19 and p53 protein levels compared to IMCE neo cells, suggesting that alterations in these two key genes may mediate the effects of beta-cat on both cellular senescence and apoptosis. IMCE beta-cat cells were also transformed as determined by growth in the absence of serum, anchorage-independent growth, and sustained tumor growth in nude mice. Stable beta-cat-expressing populations could not be generated in conditionally immortalized colonic epithelia cells with a wild-type Apc background. These studies demonstrated the immortalizing activity of stabilized beta-cat for the first time and extend the transforming ability of mutated beta-cat to a cell line representing a precursor to colorectal cancer.