One of the fundamental tenets of oncology is that tumors arise from stem cells. In the colon, stem cells are thought to reside at the base of crypts. In the early stages of tumorigenesis, however, dysplastic cells are routinely found at the luminal surface of the crypts whereas the cells at the bases of these same crypts appear morphologically normal. To understand this discrepancy, we evaluated the molecular characteristics of cells isolated from the bases and orifices of the same crypts in small colorectal adenomas. We found that the dysplastic cells at the tops of the crypts often exhibited genetic alterations of adenomatous polyposis coli (APC) and neoplasia-associated patterns of gene expression. In contrast, cells located at the base of these same crypts did not contain such alterations and were not clonally related to the contiguous transformed cells above them. These results imply that development of adenomatous polyps proceeds through a top-down mechanism. Genetically altered cells in the superficial portions of the mucosae spread laterally and downward to form new crypts that first connect to preexisting normal crypts and eventually replace them.