Axin and the adenomatous polyposis coli protein (APC) interact to down-regulate the proto-oncogene beta-catenin. We show that transposition of an axin-binding site can confer beta-catenin regulatory activity to a fragment of APC normally lacking this activity. The fragment containing the axin-binding site also underwent hyperphosphorylation when coexpressed with axin. The phosphorylation did not require glycogen synthase kinase 3beta but instead required casein kinase 1epsilon, which bound directly to axin. Mutation of conserved serine residues in the beta-catenin regulatory motifs of APC interfered with both axin-dependent phosphorylation and phosphorylation by CKIepsilon and impaired the ability of APC to regulate beta-catenin. These results suggest that the axin-dependent phosphorylation of APC is mediated in part by CKIepsilon and is involved in the regulation of APC function.