The Wnt/β-catenin pathway plays multiple and diverse roles in development by regulating gene expression via T-cell factor/Lymphoid enhancer-binding factor (Tcf/Lef) DNA binding factors. Misregulation of this pathway is thought to initiate colon adenoma formation. It is controversial whether Tcf4 (Tcf7L2) functions as an oncogene or tumor suppressor gene in colon carcinogenesis. We show here that Tcf4 haploinsufficiency results in colon tumor formation in a mouse tumor model that normally only develops small intestinal tumors. Further, we show that loss of Tcf4 early in development and in adult colon results in increased cell proliferation. These findings strongly suggest that Tcf4 normally modulates proliferation of the colonic epithelium and that disruption of Tcf4 activity increases proliferation, leading to colon tumorigenesis. Taken together, our in vivo studies favor a tumor suppressor function for Tcf4.