THE cytoplasmic proteins beta-catenin of vertebrates and armadillo of Drosophila have two functions : they link the cadherin cell-adhesion molecules to the cytoskeleton(1-4), and they participate in the wnt/wingless signalling pathway(5-7). Here we show, in a yeast two-hybrid screen, that the architectural transcription factor LEF-1 (for lymphoid enhancer-binding factor)(8-10) interacts with beta-catenin. In mammalian cells, coexpressed LEF-1 and beta-catenin form a complex that is localized to the nucleus and can be detected by immunoprecipitation, Moreover, LEF-1 and beta-catenin form a ternary complex with DNA that displays an altered DNA bend. Microinjection of LEF-1 into Xenopus embryos induces axis duplication, which is augmented by interaction with beta-catenin. Thus beta-catenin regulates gene expression by direct interaction with transcription factors such as LEF-1, providing a molecular mechanism for the transmission of signals from cell-adhesion components or ant protein to the nucleus.