Truncation of the tumour suppressor adenomatous polyposis coli (Apc) constitutively activates the Wnt/beta-catenin signalling pathway. Apc has a role in development: for example, embryos of mice with truncated Apc do not complete gastrulation. To understand this role more fully, we examined the effect of truncated Apc on zebrafish development. Here we show that, in contrast to mice, zebrafish do complete gastrulation. However, mutant hearts fail to loop and form excessive endocardial cushions. Conversely, overexpression of Apc or Dickkopf 1 (Dkk1), a secreted Wnt inhibitor, blocks cushion formation. In wild-type hearts, nuclear beta-catenin, the hallmark of activated canonical Wnt signalling, accumulates only in valve-forming cells, where it can activate a Tcf reporter. In mutant hearts, all cells display nuclear beta-catenin and Tcf reporter activity, while valve markers are markedly upregulated. Concomitantly, proliferation and epithelial-mesenchymal transition, normally restricted to endocardial cushions, occur throughout the endocardium. Our findings identify a novel role for Wnt/beta-catenin signalling in determining endocardial cell fate.