Studies have demonstrated cross talk between beta-catenin and peroxisome proliferator-activated receptor gamma (PPARgamma) signaling pathways. Specifically, activation of PPARgamma induces the proteasomal degradation of beta-catenin in cells that express an adenomatous polyposis coli-containing destruction complex. In contrast, oncogenic beta-catenin is resistant to such degradation and inhibits the expression of PPARgamma target genes. In the present studies, we demonstrate a functional interaction between beta-catenin and PPARgamma that involves the T-cell factor (TCF)/lymphocyte enhancer factor (LEF) binding domain of beta-catenin and a catenin binding domain (CBD) within PPARgamma. Mutation of K312 and K435 in the TCF/LEF binding domain of an oncogenic beta-catenin (S37A) significantly reduces its ability to interact with and inhibit the activity of PPARgamma. Furthermore, these mutations render S37A beta-catenin susceptible to proteasomal degradation in response to activation of PPARgamma. Mutation of F372 within the CBD (helices 7 and 8) of PPARgamma disrupts its binding to beta-catenin and significantly reduces the ability of PPARgamma to induce the proteasomal degradation of beta-catenin. We suggest that in normal cells, PPARgamma can function to suppress tumorigenesis and/or Wnt signaling by targeting phosphorylated beta-catenin to the proteasome through a process involving its CBD. In contrast, oncogenic beta-catenin resists proteasomal degradation by inhibiting PPARgamma activity, which requires its TCF/LEF binding domain.