Adenomatous polyposis coli (APC) mutations cause Wnt pathway activation in human cancers. Current models for APC action emphasize its role in promoting β-catenin degradation downstream of Wnt receptors. Unexpectedly, we find that blocking Wnt receptor activity in APC-deficient cells inhibits Wnt signaling independently of Wnt ligand. We also show that inducible loss of APC is rapidly followed by Wnt receptor activation and increased β-catenin levels. In contrast, APC2 loss does not promote receptor activation. We show that APC exists in a complex with clathrin and that Wnt pathway activation in APC-deficient cells requires clathrin-mediated endocytosis. Finally, we demonstrate conservation of this mechanism in Drosophila intestinal stem cells. We propose a model in which APC and APC2 function to promote β-catenin degradation, and APC also acts as a molecular "gatekeeper" to block receptor activation via the clathrin pathway.