Wingless/Wnt signaling directs cell-fate choices during embryonic development. In Drosophila, Wingless signaling mediates endoderm induction and the establishment of segment polarity in the developing embryo. The fly Wingless cascade is strikingly similar to the vertebrate Wnt signaling pathway, which controls a number of key developmental decisions such as dorsal-ventral patterning in Xenopus. Factors of the TCF/LEF HMG domain family (Tcfs) have recently been established as the downstream effectors of the Wingless/Wnt signal transduction pathways. Upon Wingless/Wnt signaling, a cascade is initiated that results in the accumulation of cytoplasmic β- catenin (or its fly homolog, Armadillo). There is also a concomitant translocation of β-catenin/Armadillo to the nucleus, where it interacts with a specific sequence motif at the N terminus of Tcfs to generate a transcriptionally active complex. This bipartite transcription factor is targeted to the upstream regulatory regions of Tcf target genes including Siamois and Nodal related gene-3 in Xenopus, engrailed and Ultrabithorax in Drosophila via the sequence-specific HMG box, and mediates their transcriptional activation by virtue of transactivation domains contributed by β-catenin/Armadillo. In the absence of Wingless/Wnt signals, a key negative regulator of the pathway, GSK3β, is activated, which mediates the downregulation of cytoplasmic β-catenin/Armadillo via the ubiquitin- proteasome pathway. In the absence of nuclear β-catenin, the Tcfs recruit the corepressor protein Groucho to the target gene enhancers and actively repress their transcription. An additional corepressor protein, CREB-binding protein (CBP), may also be involved in this repression of Tcf target gene activity. Several other proteins, including adenomatous polyposis coli (APC), GSK3β, and Axin/Conductin, are instrumental in the regulation of β- catenin/Armadillo. In APC-deficient colon carcinoma cell lines, β-catenin accumulates and is constitutively complexed with nuclear Tcf-4. A proportion of APC wild-type colon carcinomas and melanomas also contains constitutive nuclear Tcf-4/β-catenin complexes as a result of dominant mutations in the N terminus of β-catenin that render it insensitive to downregulation by APC, GSK3β, and Axin/Conductin. This results in the unregulated expression of Tcf-4 target genes such as c-myc. Based on the established role for Tcf-4 in maintaining intestinal stem cells it is likely that deregulation of c-myc expression as a result of constitutive Tcf-4/β-catenin activity promotes uncontrolled intestinal cell proliferation. This would readily explain the formation of intestinal polyps during colon carcinogenesis. Similar mechanisms leading to deregulation of Tcf target gene activity are likely to be involved in melanoma and other forms of cancer.