beta-Catenin is a protein known to associate with the cytoplasmic domains of members of the cadherin family of cell adhesion molecules. Recently, Funayama et al. (Funayama et al. (1995). J. Cell Biol. 128, 959-968.) demonstrated that overexpression of beta-catenin causes the formation of a secondary axis in Xenpus laevis embryos. In order to understand the role of beta-catenin in axis formation, we examined its biological activity in further detail. beta-Catenin is effective at inducing a secondary axis when overexpressed in the vegetal ventral region of early cleavage stage (4-32 cell) embryos. beta-Catenin may act as part of the Nieuwkoop center because cells overexpressing beta-catenin do not contribute directly to axial structures. Overexpression of beta-catenin can specify de novo axis formation, as shown by its ability to rescue UV-ventralized embryos. Overexpression of beta-catenin alone is not sufficient to cause elongation of animal caps or to induce mesodermal markers in animal caps. In these assays, overexpression of beta-catenin behaves like ectopic expression of certain members of the Wnt gene family. Like Wnts, overexpression of beta-catenin was also found to increase gap junctional communication in cells of the ventral animal cap. Overexpression of beta-catenin causes a small increase in the rate of aggregation of Xenopus blastomeres. Overexpression of C-cadherin causes a more dramatic increase in the rate of aggregation of Xenopus blastomeres, but does not enhance gap junction communication or induce axis duplication; hence, we argue that increased adhesion is not sufficient to account for beta-catenin's ability to regulate patterning or gap junction communication. We propose a signaling role for beta-catenin during axis formation in Xenopus.