Distinct molecular forms of β-catenin are targeted to adhesive or transcriptional complexes

β-Catenin plays essential roles in both cell–cell adhesion and Wnt signal transduction, but what precisely controls β-catenin targeting to cadherin adhesive complexes, or T-cell factor (TCF)-transcriptional complexes is less well understood. We show that during Wnt signaling, a form of β-catenin is generated that binds TCF but not the cadherin cytoplasmic domain. The Wnt-stimulated, TCF-selective form is monomeric and is regulated by the COOH terminus of β-catenin, which selectively competes cadherin binding through an intramolecular fold-back mechanism. Phosphorylation of the cadherin reverses the TCF binding selectivity, suggesting another potential layer of regulation. In contrast, the main cadherin-binding form of β-catenin is a β-catenin–α-catenin dimer, indicating that there is a distinct molecular form of β-catenin that can interact with both the cadherin and α-catenin. We propose that participation of β-catenin in adhesion or Wnt signaling is dictated by the regulation of distinct molecular forms of β-catenin with different binding properties, rather than simple competition between cadherins and TCFs for a single constitutive form. This model explains how cells can control whether β-catenin is used independently in cell adhesion and nuclear signaling, or competitively so that the two processes are coordinated and interrelated.