The tumor suppressor function of the adenomatous polyposis coli protein (APC) depends, in part, on its ability to bind and regulate the multifunctional protein, beta-catenin. beta-Catenin binds the high mobility group box transcription factors, lymphocyte enhancer-binding factor (LEF) and T-cell factor, to directly regulate gene transcription. Using LEF reporter assays we find that APC-mediated down-regulation of beta-catenin-LEF signaling is reversed by proteasomal inhibitors in a dose-dependent manner. APC down-regulates signaling induced by wild type beta-catenin but not by the non-ubiquitinatable S37A mutant, beta-catenin, Bisindoylmaleimide type protein kinase C inhibitors, which prevent beta-catenin ubiquitination, decrease the ability of APC to down-regulate beta-catenin-LEF signaling. All these effects on LEF signaling are paralleled by changes in beta-catenin protein levels, Lithium, an inhibitor of glycogen synthase kinase-3 beta, does not alter the ability of APC to down-regulate beta-catenin protein and beta-catenin-LEF signaling in the colon cancer cells that were tested. These results point to a role for beta-catenin ubiquitination, proteasomal degradation, and potentially a serine kinase other than glycogen synthase kinase-3 beta in the tumor-suppressive actions of APC.