The tumor suppressor adenomatous polyposis coli (APC) plays a critical role in the turnover of cytosolic beta-catenin, the key effector of the canonical Wnt signaling pathway. APC contains seven 20 amino acid (20 aa) beta-catenin binding repeats that are required for beta-catenin turnover. We have determined the crystal structure of beta-catenin in complex with a phosphorylated APC fragment containing two 20 aa repeats. Surprisingly, one single phosphorylated 20 aa repeat, together with its flanking regions, covers the entire structural groove of beta-catenin and may thus compete for beta-catenin binding with all other beta-catenin armadillo repeat partners. Our biochemical studies show that phosphorylation of the APC 20 aa repeats increases the affinity of the repeats for beta-catenin by 300- to 500-fold and the phosphorylated 20 aa repeats prevent beta-catenin binding to Tcf. Our work suggests that the phosphorylation of the APC 20 aa repeats could be a critical switch for APC function.