An effector of intercellular adhesion, beta-catenin also functions in Wnt signaling, associating with Lef-1/Tcf DNA-binding proteins to form a transcription factor. We report that this pathway operates in keratinocytes and that mice expressing a stabilized beta-catenin controlled by an epidermal promoter undergo a process resembling de novo hair morphogenesis. The new follicles formed sebaceous glands and dermal papilla, normally established only in embryogenesis. As in embryologically initiated hair germs, transgenic follicles induce Lef-1, but follicles are disoriented and defective in sonic hedgehog polarization. Additionally, proliferation continues unchecked, resulting in two types of tumors also found in humans. Our findings suggest that transient beta-catenin stabilization may be a key player in the long-sought epidermal signal leading to hair development and implicate aberrant beta-catenin activation in hair tumors.

In skin, multipotent stem cells generate the keratinocytes of the epidermis, sebaceous gland, and hair follicles. In this paper, we show that Tcf3 and Lef1 control these differentiation lineages. In contrast to Lef1, which requires Wnt signaling and stabilized ␤-catenin to express the hair-specific keratin genes and control hair differentiation, Tcf3 can act independently of its ␤-catenin interacting domain to suppress features of epidermal terminal differentiation, in which Tcf3 is normally shut off, and promote features of the follicle outer root sheath (ORS) and multipotent stem cells (bulge), the compartments which naturally express Tcf3. These aspects of Tcf3's action are dependent on its DNA binding and Groucho repressor-binding domains. In the absence of its ␤-catenin interacting domain, Lef1's behavior (⌬NLef1) seems to be markedly distinct from that of ⌬NTcf3. ⌬NLef1 does not suppress epidermal differentiation and promote ORS/bulge differentiation, but rather suppresses hair differentiation and gives rise to sebocyte differentiation. Taken together, these findings provide powerful evidence that the status of Tcf3/Lef complexes has a key role in controlling cell fate lineages in multipotent skin stem cells. The canonical Wnt/Wingless signaling pathway directs cell fate in a variety of cell types and has an integral role in organogenesis. At the core of the pathway is the stability of ␤-catenin, a protein that serves a dual role in intercellular junction formation and in transcriptional regulation. Wnt signaling inhibits the amino-terminal phosphorylation and subsequent degradation of ␤-catenin, allowing cytoplasmic pools of ␤-catenin to enter the nucleus and bind to members of the Lef1/Tcf family of HMG domain-containing DNA-binding proteins. ␤-catenin's activation domain and Lef1/Tcf's DNA-binding domain combine to form a bipartite transcriptional activator of target genes (for review, see Willert and Nusse 1998;Korswagen and Clevers 1999;Waltzer and Bienz 1999).Although Lef1/Tcf proteins often function as transactivators, these proteins can also interact with, and behave as, transcriptional repressors. CtBP represses a Wnt/Wingless response and selectively interacts with the carboxy-terminal domain of Tcf proteins, missing in Lef1 (Brannon et al. 1999). In contrast, the Groucho family of repressor proteins associate with the amino-terminal domain of all known Tcf/Lef family members (Cavallo et al. 1998;Roose et al. 1998;Brantjes et al. 2001). Genetically, a Drosophila dTcf-Groucho interaction antagonizes Wnt/Wingless signaling (Cavallo et al. 1998), and expression of Groucho proteins in Xenopus embryos can block axis formation and activation of ␤-catenin target genes, such as siamois and xnr3 ). In zebrafish, embryonic Tcf3 appears to function as a transcriptional repressor, as an amino-terminally truncated Tcf3 (missing its ␤-catenin binding domain) complements the headless phenotype caused by loss-of-function of wild-type Tcf3 (Kim et al. 2000). Therefore, in the absence of a Wnt/Wingless signal, the...

WNT signalling orchestrates a number of developmental programs. In response to this stimulus, cytoplasmic beta-catenin (encoded by CTNNB1) is stabilized, enabling downstream transcriptional activation by members of the LEF/TCF family. One of the target genes for beta-catenin/TCF encodes c-MYC, explaining why constitutive activation of the WNT pathway can lead to cancer, particularly in the colon. Most colon cancers arise from mutations in the gene encoding adenomatous polyposis coli (APC), a protein required for ubiquitin-mediated degradation of beta-catenin, but a small percentage of colon and some other cancers harbour beta-catenin-stabilizing mutations. Recently, we discovered that transgenic mice expressing an activated beta-catenin are predisposed to developing skin tumours resembling pilomatricomas. Given that the skin of these adult mice also exhibits signs of de novo hair-follicle morphogenesis, we wondered whether human pilomatricomas might originate from hair matrix cells and whether they might possess beta-catenin-stabilizing mutations. Here, we explore the cell origin and aetiology of this common human skin tumour. We found nuclear LEF-1 in the dividing tumour cells, providing biochemical evidence that pilomatricomas are derived from hair matrix cells. At least 75% of these tumours possess mutations affecting the amino-terminal segment, normally involved in phosphorylation-dependent, ubiquitin-mediated degradation of the protein. This percentage of CTNNB1 mutations is greater than in all other human tumours examined thus far, and directly implicates beta-catenin/LEF misregulation as the major cause of hair matrix cell tumorigenesis in humans.