Cell-cell contacts play a vital role in intracellular signaling, although the molecular mechanisms of these signaling pathways are not fully understood. E-cadherin, an important mediator of cell-cell adhesions, has been shown to be cleaved by gamma-secretase. This cleavage releases a fragment of E-cadherin, E-cadherin C-terminal fragment 2 (E-cad/CTF2), into the cytosol. Here, we study the fate and function of this fragment. First, we show that coexpression of the cadherin-binding protein, p120 catenin (p120), enhances the nuclear translocation of E-cad/CTF2. By knocking down p120 with short interfering RNA, we also demonstrate that p120 is necessary for the nuclear localization of E-cad/CTF2. Furthermore, p120 enhances and is required for the specific binding of E-cad/CTF2 to DNA. Finally, we show that E-cad/CTF2 can regulate the p120-Kaiso-mediated signaling pathway in the nucleus. These data indicate a novel role for cleaved E-cadherin in the nucleus.