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Epithelial ovarian cancer is a heterogeneous disease that is subdivided into five major histotypes but the mechanisms driving their differentiation are not clear. Mutations in adenomatous polyposis coli (APC) and β-catenin are commonly observed in the human ovarian endometrioid adenocarcinoma (OEA) patients. However, the mechanisms subsequent to APC deletion in ovarian tumorigenesis have not been well characterized. We have conditionally deleted APC in the murine ovarian surface epithelium (OSE) and showed that its loss leads to development of epithelial inclusion cysts. High-grade OEAs with tightly packed villoglandular histology were observed in older APC-deleted mice. Phosphatase and tensin homolog (PTEN) expression was elevated in the early lesions but lost after progression to the more advanced tumors. Knockdown of APC or expression of a gain-of-function β-catenin similarly induced human OSE cells to develop tumors with endometrioid histology in xenografts. Expression of HOXA10 was induced in both the advanced APC-deleted murine tumors and in the tumor xenografts of human OSE cells with knocked-down APC. These results show that reduced APC activity is sufficient to induce formation of epithelial inclusion cysts and support OEA development and suggest that induced HOXA10 expression and loss of PTEN are key mechanisms driving endometrioid histotype differentiation and progression.