beta-Catenin is involved in the formation of adherens junctions of mammalian epithelia. It interacts with the cell adhesion molecule E- cadherin and also with the tumor suppressor gene product APC, and the Drosophila homologue of beta-catenin, armadillo, mediates morphogenetic signals. We demonstrate here that E-cadherin and APC directly compete for binding to the internal, armadillo-like repeats of beta-catenin; the NH2-terminal domain of beta-catenin mediates the interaction of the alternative E-cadherin and APC complexes to the cytoskeleton by binding to alpha-catenin. Plakoglobin (gamma-catenin), which is structurally related to beta-catenin, mediates identical interactions. We thus show that the APC tumor suppressor gene product forms strikingly similar associations as found in cell junctions and suggest that beta-catenin and plakoglobin are central regulators of cell adhesion, cytoskeletal interaction, and tumor suppression.