The Wnt/beta-catenin/Tcf pathway serves important functions in embryonic development and is constitutively activated in human colorectal cancer. The nuclear output of Wnt signaling is mediated by a complex between DNA-binding proteins of the TCF family and the transcriptional coactivator beta-catenin. Groucho proteins act to repress transcriptional activation by beta-catenin-Tcf complexes, probably by interacting directly with Tcf transcription factors. We have identified several splice forms of the mouse Groucho Grg1 gene expressed in the developing intestine. Prominent among these is a novel and abundant isoform, Grg1-S, which we characterize in this report. Grg1-S has highest homology with the TLE family of large Groucho proteins but features only the amino-terminal Q and glycine- and proline-rich domains typical of the Groucho/AES subfamily. Grg1-S is expressed in development and in several adult mouse tissues. Expression in the adult small intestine is highest at the base of the crypts of Lieberkuhn. Grg1-S acts to antagonize beta-catenin activity in Xenopus axis duplication and luciferase reporter assays in mammalian cells. Taken together, these findings suggest that Grg1-S may operate in conjunction with beta-catenin and Tcf factors to regulate vertebrate gut epithelial cell differentiation.