Transcriptional regulation by the canonical Wnt pathway involves the stabilization and nuclear accumulation of beta-catenin, which assembles with LEF1/TCF transcription factors and cofactors to activate Wnt target genes. Recently, the nuclear beta-catenin complex has been shown to contain BCL9, which interacts with beta-catenin and recruits Pygopus as a transcriptional coactivator. However, the presumed general functions of Pygopus and BCL9, which has been proposed to act as a scaffolding protein for Pygopus, have been challenged by the rather specific and modest developmental defects of targeted inactivations of both the Pygo1 and the Pygo2 genes. Here, we analyze the function of BCL9 in transcriptional activation by beta-catenin. We find that BCL9 acts in a cell-type-specific manner and, in part, independent of Pygopus. We show that BCL9 itself contains a transcriptional activation domain in the C terminus, which functionally synergizes in lymphoid cells with the C-terminal transactivation domain of beta-catenin. Finally, we identify amino acids in the transactivation domain of beta-catenin that are important for its function and association with the histone acetyltransferases CBP/p300 and TRRAP/GCN5. Thus, BCL9 may serve to modulate and diversify the transcriptional responses to Wnt signaling in a cell-type-specific manner.