Localization of beta-catenin in the cell is a key determinant in its decision to function as a critical mediator of cell adhesion at the surface or a transcription activator in the nucleus. SYT-SSX2 is the fusion product of the chromosomal translocation, t(X;18)(p11.2;q11.2), which occurs in synovial sarcoma, a soft tissue tumor. SYT-SSX2 is known to associate with chromatin remodeling complexes and is proposed to be involved in controlling gene expression. We report that SYT-SSX2 plays a direct role in beta-catenin regulation. When expressed in mammalian cells, SYT-SSX2-induced beta-catenin recruitment to the nucleus. Interestingly, known target genes of canonical Wnt were not activated as a result of SYT-SSX2 expression, nor was the nuclear localization of beta-catenin due to one of the signaling pathways normally implicated in this event. beta-Catenin accumulation in the nucleus led to the formation of a transcriptionally active nuclear complex that contained SYT-SSX2 and beta-catenin. More importantly, depletion of SYT-SSX2 in primary synovial sarcoma cells resulted in loss of nuclear beta-catenin signal and a significant decrease in its signaling activity. These results unravel a novel pathway in the control of beta-catenin cellular transport and strongly suggest that SYT-SSX2 contributes to tumor development, in part through beta-catenin signaling.