Adult stem cells define a cellular reserve with the unique capacity to replenish differentiated cells of a tissue throughout an organism's lifetime. Previous analysis has demonstrated that the adult Drosophila midgut is maintained by a population of multipotent intestinal stem cells (ISCs) that resides in epithelial niches. Adenomatous polyposis coli (Apc), a tumor suppressor gene conserved in both invertebrates and vertebrates, is known to play a role in multiple developmental processes in Drosophila. Here, we examine the consequences of eliminating Apc function on adult midgut homeostasis. Our analysis shows that loss of Apc results in the disruption of midgut homeostasis and is associated with hyperplasia and multilayering of the midgut epithelium. A mosaic analysis of marked ISC cell lineages demonstrates that Apc is required specifically in ISCs to regulate proliferation, but is not required for ISC self-renewal or the specification of cell fate within the lineage. Cell autonomous activation of Wnt signaling in the ISC lineage phenocopied Apc loss and Apc mutants were suppressed in an allele-specific manner by abrogating Wnt signaling, suggesting that the effects of Apc are mediated in part by the Wnt pathway. Together, these data underscore the essential requirement of Apc in exerting regulatory control over stem cell activity, as well as the consequences that disrupting this regulation can have on tissue homeostasis.