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Glycogen synthase kinase 3 (GSK-3) is a constitutively active kinase that negatively regulates its substrates, one of which is β-catenin, a downstream effector of the Wnt signaling pathway that is required for dorsal–ventral axis specification in the Xenopus embryo. GSK-3 activity is regulated through the opposing activities of multiple proteins. Axin, GSK-3, and β-catenin form a complex that promotes the GSK-3–mediated phosphorylation and subsequent degradation of β-catenin. Adenomatous polyposis coli (APC) joins the complex and downregulates β-catenin in mammalian cells, but its role in Xenopus is less clear. In contrast, GBP, which is required for axis formation in Xenopus, binds and inhibits GSK-3. We show here that GSK-3 binding protein (GBP) inhibits GSK-3, in part, by preventing Axin from binding GSK-3. Similarly, we present evidence that a dominant-negative GSK-3 mutant, which causes the same effects as GBP, keeps endogenous GSK-3 from binding to Axin. We show that GBP also functions by preventing the GSK-3–mediated phosphorylation of a protein substrate without eliminating its catalytic activity. Finally, we show that the previously demonstrated axis-inducing property of overexpressed APC is attributable to its ability to stabilize cytoplasmic β-catenin levels, demonstrating that APC is impinging upon the canonical Wnt pathway in this model system. These results contribute to our growing understanding of how GSK-3 regulation in the early embryo leads to regional differences in β-catenin levels and establishment of the dorsal axis.

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