Colorectal cancer (CRC) is a major health problem in industrialized countries. Although inflammation-linked carcinogenesis is a well accepted concept and is often observed within the gastrointestinal tract, the underlying mechanisms remain to be elucidated. Inflammation can indeed provide initiating and promoting stimuli and mediators, generating a tumour-prone microenvironment. Activation of the canonical WNT pathway occurs in the vast majority of colorectal cancers. We have generated a novel mouse model whereby a mutant form of β-catenin (Ctnnb1) carrying an amino-terminal deletion of 131 amino acids has been introduced into the endogenous gpA33 gene locus, allowing specific expression of the truncated, oncogenic β-catenin (henceforth referred to as “ΔN-Bcat”) in the intestinal epithelium. The A33ΔN-Bcat mouse recapitulates a relatively weak level of Wnt activation, which was nonetheless sufficient to shift the cell fate towards the Paneth cell lineage in pre-malignant intestinal epithelium. Interestingly, the mutant intestinal epithelium had deregulated membrane expression of E-cadherin leading to increased intestinal permeability. This resulted in a chronic mild colitis which was manifest in elevated levels of inflammatory cytokines and increased susceptibility to the luminal irritant dextran sulfate sodium (DSS). Furthermore, the mutant β-catenin synergised with other genetic mutations that activated the Wnt pathway as evidenced by an increase of intestinal polyposis. In contrast, combining the A33ΔN-Bcat mutation with an oncogenic KrasG12V transgene showed a merely additive phenotype. We propose a mechanism whereby oncogenic β-catenin leads to colitis which potently cooperates with other mutations in the Wnt pathway by inducing a transcriptional expression program that promotes early tumourigenesis through the creation of a pro-angiogenic and pro-neoplastic microenvironment.