ILKAP, a protein serine/threonine (S/T) phosphatase of the PP2C family, was isolated in a yeast two-hybrid screen baited with integrin-linked kinase, ILK1, Association of ILK1 and ILKAP was independent of the catalytic activity of either partner, as assayed in co-precipitation and two-hybrid experiments. Conditional expression of ILKAP in HEK 293 cells resulted in selective inhibition of ECM- and growth factor-stimulated ILK1 activity, but did not inhibit Raf-l kinase activity. A catalytic mutant of ILKAP, H154D, did not inhibit ILK1 kinase activity. Two cellular targets of ILK1, glycogen synthase kinase 3 beta (GSK3 beta) and protein kinase B (PKB)/AKT, were differentially affected by ILKAP-mediated inhibition of ILK1, Catalytically active, but not mutant ILKAP, strongly inhibited insulin-like growth factor-1-stimulated GSK3 beta phosphorylation on Ser9, but did not affect phosphorylation of PKB on Ser473, suggesting that ILKAP selectively affects ILK-mediated GSK3 beta signalling. Consistent with this, active, but not H154D mutant or the related PP2C alpha, selectively inhibited transactivation of a Tcf/Lef reporter gene, TOPFlash, in 293 cells. We propose that ILKAP regulates ILK1 activity, targeting ILK1 signalling of Wnt pathway components via modulation of GSK3 beta phosphorylation.