In Xenopus, axis development is initiated by dorsally elevated levels of cytoplasmic beta-catenin, an intracellular factor regulated by GSK3 kinase activity. Upon fertilization, factors that increase beta-catenin stability are translocated to the prospective dorsal side of the embryo in a microtubule-dependent process. However, neither the identity of these factors nor the mechanism of their movement is understood. Here, we show that the GSK3 inhibitory protein GBP/Frat binds kinesin light chain (KLC), a component of the microtubule motor kinesin. Upon egg activation, GBP-GFP and KLC-GFP form particles and exhibit directed translocation. KLC, through a previously uncharacterized conserved domain, binds a region of GBP that is required for GBP translocation and for GSK3 binding, and competes with GSK3 for GBP. We propose a model in which conventional kinesin transports a GBP-containing complex to the future dorsal side, where GBP dissociates and contributes to the local stabilization of beta-catenin by binding and inhibiting GSK3.