With the goal of modeling human disease of the large intestine, we sought to develop an effective protocol for deriving colonic organoids (COs) from differentiated human embryonic stem cells (hESCs) or induced pluripotent stem cells (iPSCs). Extensive gene and immunohistochemical profiling confirmed that the derived COs represent colon rather than small intestine, containing stem cells, transit-amplifying cells, and the expected spectrum of differentiated cells, including goblet and endocrine cells. We applied this strategy to iPSCs derived from patients with familial adenomatous polyposis (FAP-iPSCs) harboring germline mutations in the WNT-signaling-pathway-regulator gene encoding APC, and we generated COs that exhibit enhanced WNT activity and increased epithelial cell proliferation, which we used as a platform for drug testing. Two potential compounds, XAV939 and rapamycin, decreased proliferation in FAP-COs, but also affected cell proliferation in wild-type COs, which thus limits their therapeutic application. By contrast, we found that geneticin, a ribosome-binding antibiotic with translational 'read-through' activity, efficiently targeted abnormal WNT activity and restored normal proliferation specifically in APC-mutant FAP-COs. These studies provide an efficient strategy for deriving human COs, which can be used in disease modeling and drug discovery for colorectal disease.