Elevated Wnt/ -catenin signaling has been commonly associated with tumorigenesis especially colorectal cancer (CRC). Here, an MST4-p -catenin Thr40 signaling axis essential for intestinal stem cell (ISC) homeostasis and CRC development is uncovered. In response to Wnt3a stimulation, the kinase MST4 directly phosphorylates -catenin at Thr40 to block its Ser33 phosphorylation by GSK3 . Thus, MST4 mediates an active process that prevents -catenin from binding to and being degraded by -TrCP, leading to accumulation and full activation of -catenin. Depletion of MST4 causes loss of ISCs and inhibits CRC growth. Mice bearing either MST4 T178E mutation with constitutive kinase activity or -catenin T40D mutation mimicking MST4-mediated phosphorylation show overly increased ISCs/CSCs and exacerbates CRC. Furthermore, the MST4-p -catenin Thr40 axis is upregulated and correlated with poor prognosis of human CRC. Collectively, this work establishes a previously undefined machinery for -catenin activation, and further reveals its function in stem cell and tumor biology, opening new opportunities for targeted therapy of CRC.