Differential adhesion between embryonic cells has been proposed to be mediated by a family of closely related glycoproteins called the cadherins. The cadherins mediate adhesion in part through an interaction between the cadherin cytoplasmic domain and intracellular proteins, called the catenins. To determine whether these interactions could regulate cadherin function in embryos, a form of N-cadherin was generated that lacks an extracellular domain. Expression of this mutant in Xenopus embryos causes a dramatic inhibition of cell adhesion. Analysis of the mutant phenotype shows that at least two regions of the N-cadherin cytoplasmic domain can inhibit adhesion and that the mutant cadherin can inhibit catenin binding to E-cadherin. These results suggest that cadherin-mediated adhesion can be regulated by cytoplasmic interactions and that this regulation may contribute to morphogenesis when emerging tissues coexpress several cadherin types.