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The Dishevelled (Dvl) gene family encodes cytoplasmic proteins that are necessary for Wnt signal transduction. Utilizing the yeast two-hybrid system,we identified protein phosphatase 2Calpha (PP2C) as a Dvl-PDZ domain-interacting protein. PP2C exists in a complex with Dvl,beta-catenin,and Axin,a negative regulator of Wnt signaling. In a Wnt-responsive LEF-1 reporter gene assay,expression of PP2C activates transcription and also elicits a synergistic response with beta-catenin and Wnt-1. In addition,PP2C expression relieves Axin-mediated repression of LEF-1-dependent transcription. PP2C utilizes Axin as a substrate both in vitro and in vivo and decreases its half-life. These results indicate that PP2C is a positive regulator of Wnt signal transduction and mediates its effects through the dephosphorylation of Axin. View Publication