Mutations in the canonical Wnt signaling pathway leading to its activation are known to cause the majority of intestinal tumors. However, few genes targeted by this pathway have been demonstrated to affect tumor development in vivo. Here we show that Tiam1, a selective Rac GTPase activator, is a Wnt-responsive gene expressed in the base of intestinal crypts and up-regulated in mouse intestinal tumors and human colon adenomas. Moreover, by comparing tumor development in APC mutant Min (multiple intestinal neoplasia) mice expressing or lacking Tiam1, we found that Tiam1 deficiency significantly reduces the formation and growth of polyps in vivo. However, invasion of malignant intestinal tumors is enhanced by a lack of Tiam1. In line with this, knock-down of Tiam1 reduced the growth potential of human colorectal cancer cells and their ability to form E-cadherin-based adhesions, a prerequisite for local invasion of tumor cells. Our data indicate a novel cross-talk between Tiam1-Rac and canonical Wnt-signaling pathways that influences intestinal tumor formation and progression.