Missense mutations in presenilin 1 (PS1) and presenilin 2 (PS2) are associated with early-onset familial Alzheimer's disease which displays an accelerated deposition of amyloid plaques and neurofibrillary tangles. Presenilins are multi-spanning transmembrane proteins which localize primarily to the endoplasmic reticulum and the Golgi compartments. We have previously demonstrated that PS1 exists as a high-molecular-mass complex that is likely to contain several functional ligands. Potential binding proteins were screened by the yeast two-hybrid system using the cytoplasmically orientated PS1 loop domain which was shown to interact strongly with members of the armadillo family of proteins, including beta-catenin, p0071 and a novel neuron-specific plakophilin-related armadillo protein (NPRAP). Armadillo proteins can have dual functions that encompass the stabilization of cellular junctions/synapses and the mediation of signal transduction pathways. Our observations suggest that PS1 may contribute to both aspects of armadillo-related pathways involving neurite outgrowth and nuclear translocation of beta-catenin upon activation of the wingless (Wnt) pathway. Alzheimer's disease (AD)-related presenilin mutations exhibit a dominant gain of aberrant function resulting in the prevention of beta-catenin translocation following Wnt signalling. These findings indicate a functional role for PS1 in signalling and suggest that mistrafficking of selected presenilin ligands may be a potential mechanism in the genesis of AD.