Aberrant activation of WNT signalling and loss of BMP signals represent the two main alterations leading to the initiation of colorectal cancer (CRC). Here we screen for genes required for maintaining the tumour stem cell phenotype and identify the zinc-finger transcription factor GATA6 as a key regulator of the WNT and BMP pathways in CRC. GATA6 directly drives the expression of LGR5 in adenoma stem cells whereas it restricts BMP signalling to differentiated tumour cells. Genetic deletion of Gata6 from mouse colon adenomas increases the levels of BMP factors, which signal to block self-renewal of tumour stem cells. In human tumours, GATA6 competes with β-catenin/TCF4 for binding to a distal regulatory region of the BMP4 locus that has been linked to increased susceptibility to development of CRC. Hence, GATA6 creates an environment permissive for CRC initiation by lowering the threshold of BMP signalling required for tumour stem cell expansion.