Beta-catenin is a multifunctional protein involved in both cadherin-mediated adhesion and the wnt signaling cascade. Mutations in exon 3 of beta-catenin have been identified in many cancers. In addition to disruption of key serine and threonine residues, mutations are frequently reported in other residues in exon 3 that are not kinase substrates. The most frequently mutated nonserine/threonine residues are D32 and G34. Since D32 and G34 are part of the ubiquitination destruction motif, DSGPhiXS, we hypothesize that this motif may contribute to disruption of beta-catenin homeostasis and lead to cellular transformation. We demonstrate that the mutants D32A and G34A exhibit no change in phosphorylation by GSK3beta, but display reduced ubiquitination compared to wild-type and S33A mutant beta-catenin. To assess the functional implications of these mutations, we created stable MDCK cell lines expressing these constructs. We found that stable cell lines harboring D32A-mutated beta-catenin were highly transformed, while S33A and G34 demonstrated only weak transforming properties in our assays. Despite altered ubiquitination status and increased transformation, the D32A mutant cell line does not display transcriptional activation of standard target genes. Therefore, D32A mutation may mediate transformation by an alternative beta-catenin-mediated signaling pathway.