The tumor suppressor adenomatous polyposis coli (APC) negatively regulates Wingless (Wg)/Wnt signal transduction by helping target the Wnt effector β-catenin or its Drosophila homologue Armadillo (Arm) for destruction. In cultured mammalian cells, APC localizes to the cell cortex near the ends of microtubules. Drosophila APC (dAPC) negatively regulates Arm signaling, but only in a limited set of tissues. We describe a second fly APC, dAPC2, which binds Arm and is expressed in a broad spectrum of tissues. dAPC2's subcellular localization revealed colocalization with actin in many but not all cellular contexts, and also suggested a possible interaction with astral microtubules. For example, dAPC2 has a striking asymmetric distribution in neuroblasts, and dAPC2 colocalizes with assembling actin filaments at the base of developing larval denticles. We identified a dAPC2 mutation, revealing that dAPC2 is a negative regulator of Wg signaling in the embryonic epidermis. This allele acts genetically downstream of wg, and upstream of arm, dTCF, and, surprisingly, dishevelled. We discuss the implications of our results for Wg signaling, and suggest a role for dAPC2 as a mediator of Wg effects on the cytoskeleton. We also speculate on more general roles that APCs may play in cytoskeletal dynamics