The Wnt/β-catenin pathway is involved in the regulation of a multitude of physiological processes by controlling the differential expression of target genes. In certain tissues such as the adult liver, the Wnt/β-catenin pathway can attain different levels of activity due to gradients of Wnt ligands and/or intracellular pathway components like APC. How graded pathway activity is converted into regionally distinct patterns of Wnt/β-catenin target gene expression is largely unknown. Here, we apply a mathematical modeling approach to investigate the impact of different regulatory mechanisms on target gene expression within Wnt or APC concentration gradients. We develop a minimal model of Wnt/β-catenin signal transduction and combine it with various mechanisms of target gene regulation. In particular, the effects of activation, inhibition, and an incoherent feedforward loop (iFFL) are compared. To specify activation kinetics, we analyze experimental data that quantify the response of β-catenin/TCF reporter constructs to different Wnt concentrations, and demonstrate that the induction of these constructs occurs in a cooperative manner with Hill coefficients between 2 and 5. In summary, our study shows that the combination of specific gene regulatory mechanisms with a time-independent gradient of Wnt or APC is sufficient to generate distinct target gene expression patterns as have been experimentally observed in liver. We find that cooperative gene activation in combination with a TCF feedback can establish sharp borders of target gene expression in Wnt or APC gradients. In contrast, the iFFL renders gene expression independent of gradients of the upstream signaling components. Our subsequent analysis of carcinogenic pathway mutations reveals that their impact on gene expression is determined by the gene regulatory mechanism and the APC concentration of the cell in which the mutation occurs.