The Wilms' tumor suppressor gene, wt1, encodes a zinc-finger protein, WT1, that functions as a potent inhibitor of cell growth. The findings that expression levels of WT1 were down-regulated in breast cancer cell lines and in subsets of primary breast tumors led us to investigate the possible role of WT1 in tumorigenesis of breast cancer. We have established stable cell lines from a breast cancer cell line MDA-MB-231 to express exogenous WT1, and investigated the ability of WT1 to inhibit the transformed phenotype of MDA-MB-231 cells. We found that WT1 suppressed clonal growth of MDA-MB-231 cells in soft-agar and inhibited tumor growth of these cells in nude mice. We also found that the steady state levels of beta-catenin protein and the transcription activity of beta-catenin/Tcf signaling pathway were dramatically decreased in WT1-transfected cells. This decrease of beta-catenin was associated with increased levels of beta-catenin phosphorylation. Furthermore, the expression levels of GSK-3 beta, the kinase that phosphorylates beta-catenin and signals its degradation, were up-regulated in WT1-transfected cells. The results suggest that WT1 inhibits the transformed phenotype of breast cancer cells and down-regulates the beta-catenin/TCF signaling pathway through destabilization of beta-catenin.