Signal transduction by beta-catenin involves its posttranslational stabilization and import to the nucleus where it interacts with transcription factors. Recent implications for beta-catenin signaling in cancer prompted us to examine colon cancer cell lines for the expression of LEF-1, a transcription factor that binds to beta-catenin. The analysis of several cell lines revealed the expression of LEF1 mRNA and a constitutive association of the LEF-1 protein with beta-catenin. In contrast to the colon cells, PC12 and 293 cells did not contain a beta-catenin-LEF-1 complex, even though both proteins were detected in cell lysates. In these cells, the association of endogenous LEF1 and beta-catenin was induced by stimulation with the wnt-1 proto-oncogene. The complex formed following transient stimulation with wnt-1 and also persisted in cells stably expressing wnt-1. Ectopic overexpression of beta-catenin in 293 cells also induced the assembly of the beta-catenin-LEF-1 complex and activated gene transcription from a LEF-1-dependent promotor. Expression of mutant oncogenic forms of beta-catenin identified in cancer cells resulted in higher levels of transcriptional activity. The results suggest that a cancer pathway driven by wnt-1, or mutant forms of beta-catenin, may involve the formation of a persistent transcriptionally active complex of beta-catenin and LEF1.