The tumor suppressor Adenomatous polyposis coli (APC) negatively regulates Wnt signaling through its activity in the destruction complex. APC binds directly to the main effector of the pathway, β-catenin (βcat, Drosophila Armadillo), and helps to target it for degradation. In vitro studies demonstrated that a nonphosphorylated 20-amino-acid repeat (20R) of APC binds to βcat through the N-terminal extended region of a 20R. When phosphorylated, the phospho-region of an APC 20R also binds βcat and the affinity is significantly increased. These distinct APC-βcat interactions suggest different models for the sequential steps of destruction complex activity. However, the in vivo role of 20R phosphorylation and extended region interactions has not been rigorously tested. Here we investigated the functional role of these molecular interactions by making targeted mutations in Drosophila melanogaster APC2 that disrupt phosphorylation and extended region interactions and deletion mutants missing the Armadillo binding repeats. We tested the ability of these mutants to regulate Wnt signaling in APC2 null and in APC2 APC1 double-null embryos. Overall, our in vivo data support the role of phosphorylation and extended region interactions in APC2's destruction complex function, but suggest that the extended region plays a more significant functional role. Furthermore, we show that the Drosophila 20Rs with homology to the vertebrate APC repeats that have the highest affinity for βcat are functionally dispensable, contrary to biochemical predictions. Finally, for some mutants, destruction complex function was dependent on APC1, suggesting that APC2 and APC1 may act cooperatively in the destruction complex.