Matrilysin is a matrix metalloproteinase expressed in the tumor cells of greater than 80% of intestinal adenomas. The majority of these intestinal tumors are associated with the accumulation of beta-catenin, a component of the cadherin adhesion complex and, through its association with the T Cell Factor (Tcf) DNA binding proteins, a regulator in the Wnt signal transduction pathway. In murine intestinal tumors, matrilysin transcripts show striking overlap with the accumulation of beta-catenin protein. The matrilysin promoter is upregulated as much as 12-fold by beta-catenin in colon tumor cell lines in a manner inversely proportional to the endogenous levels of beta-catenin/Tcf complex and is dependent upon a single optimal Tcf-4 recognition site. Coexpression of the E-cadherin cytoplasmic domain blocked this induction and reduced basal promoter activity in every colon cancer cell line tested. Inactivation of the Tcf binding site increased promoter activity and overexpression of the Tcf factor, LEF-1, significantly downregulated matrilysin promoter activity, suggesting that beta-catenin transactivates the matrilysin promoter by virtue of its ability to abrogate Tcf-mediated repression. Because genetic ablation of matrilysin decreases tumor formation in multiple intestinal neoplasia (Min) mice, we propose that regulation of matrilysin production by beta-catenin accumulation is a contributing factor to intestinal tumorigenesis.