Signaling by the Wnt family of extracellular proteins is critical in a variety of developmental processes in which cell and tissue polarity are established [1-5]. Wnt signal transduction has been studied mostly by the genetic approach in Drosophila and Caenorhabditis elegans [1,2,5], but the biochemical mechanisms involved remain to be elucidated. The Wnt pathway also operates during axis determination in vertebrates [3,5]. Frizzled receptors transduce a signal to Dishevelled, leading to inactivation of glycogen synthase kinase 3 (GSK3) and regulation of gene expression by the complex of beta-catenin with LEF/TCF (lymphocyte enhancer factor/T-cell factor) transcription factors [3,5]. Axin is a negative regulator of Wnt signaling and dorsal axial development in vertebrates . Here, we demonstrate that axin is associated with GSK3 in the Xenopus embryo and we localize the GSK3-binding domain to a short region of axin. Binding of GSK3 correlates with the ability of axin to inhibit axial development and with the axis-inducing activity of its dominant-negative form (delta RGS). We also find that wild-type axin, but not delta RGS, forms a complex with beta-catenin. Thus, axin may act as a docking station mediating negative regulation of beta-catenin by GSK3 during dorsoventral axis determination in vertebrate embryos.