Wnt-1 homologs have been identified in invertebrates and vertebrates and play important roles in cellular differentiation and organization. In Drosophila, the products of the segment polarity genes wingless (the Wnt-1 homolog) and armadillo participate in a signal transduction pathway important for cellular boundary formation in embryonic development, but functional interactions between the proteins are unknown. We have examined Wnt-1 function in mammalian cells in which armadillo (beta-catenin and plakoglobin) is known to bind to and regulate cadherin cell adhesion proteins. We show that Wnt-1 expression results in the accumulation of beta-catenin and plakoglobin. In addition, binding of beta-catenin to the cell adhesion protein, cadherin, is stabilized, resulting in a concomitant increase in the strength of calcium-dependent cell-cell adhesion. Thus, a consequence of the functional interaction between Wnt-1 and armadillo family members is the strengthening of cell-cell adhesion, which may lead to the specification of cellular boundaries.