To assess the role of Apc in different stages of life systematically, we generated mice containing a conditional knockout (CKO) mutant allele of Apc (ApcCKO). These mice were mated with a strain carrying Cre recombinase under the control of the human Keratin 14 (K14) promoter, which is active in basal cells of epidermis and other stratified epithelia. We report here that K14 promoter-driven loss of Apc resulted in aberrant development of several organs that require inductive epithelial–mesenchymal interactions, including hair follicle, teeth, and thymus, and resulted in neonatal death in mice. We found that Apc plays a crucial role in determinations of cell fates during the embryonic development, possibly via temporal and tissue-specific regulation of β-catenin levels in the skin, its appendages, and in the thymus.