Multiple cancers exhibit mutations in beta-catenin that lead to increased stability, altered localization or amplified activity. beta-catenin is situated at the junction between the cadherin-mediated cell adhesion and Wnt signaling pathways, and TIMP3 functions to alter beta-catenin signaling. Here we demonstrate that primary mouse embryonic fibroblasts (MEFs) and mammary epithelial cells (MECs) deficient in Timp3 have increased beta-catenin signaling. Functionally, the loss of TIMP3 exerted cell-type-specific effects, with Timp3(-/-) MEFs being more sensitive and Timp3(-/-) MECs more resistant to EGTA-induced cell detachment than the wild type. Timp3(-/-) MECs had higher dephosphorylated beta-catenin levels and increased beta-catenin transcriptional activity as measured by TCF/LEF-responsive reporter assays. Real-time PCR analysis of beta-catenin target genes in MEFs and MECs showed no alteration in Myc, decreased Ccnd1 (cyclin D1) and increased Mmp7 mRNA levels upon loss of TIMP3, with the latter occurring only in epithelial cells. Recombinant TIMP3 and synthetic metalloproteinase inhibitors reverted the increase in dephosphorylated beta-catenin, decrease in Ccnd1 gene expression and increase in Mmp7 gene expression. Physiologically, Timp3(-/-) mammary glands displayed accelerated mammary ductal elongation during pubertal morphogenesis. Gain-of-function studies using slow-release TIMP-containing pellets revealed distinct effects of individual TIMPs on ductal morphogenesis. Recombinant TIMP1, TIMP3 and TIMP4 inhibited ductal elongation whereas TIMP2 promoted this process.