In most human colorectal cancers, mutations in the adenomatous polyposis coli gene (APC) or CTNNB1 constitutively activate the -catenin/T-cell factor (TCF)/ lymphoid enhancer factor (LEF) signaling pathway. Here, we show that the transcription factor activator protein (AP)-2␣ inhibited a -catenin/TCF-responsive reporter in human embryonic kidney 293 cells and in two human colorectal cancer lines, despite the fact that -catenin and TCF-4 protein levels were unchanged in the nucleus. Co-immunoprecipitation studies revealed that AP-2␣ formed a complex with APC and -catenin and that AP-2␣ disrupted -catenin/TCF-4 interactions in the nucleus. Thus, AP-2␣⅐APC⅐-catenin complex formation appears to suppress -catenin transactivation by shifting the pool of nuclear -catenin toward an inactive form, having reduced binding to TCF/LEF transcription factors. Glutathione S-transferase pull-down assays showed that AP-2␣ physically associated with APC rather than with -catenin, and the AP-2␣ binding site was identified in the N terminus of APC, involving both the heptad and armadillo repeat domains, whereas the APC binding site in AP-2␣ was in the basic region of the C-terminal DNA binding domain. These findings provide the first evidence for a specific interaction between the tumor suppressor protein APC and the transcription factor AP-2␣, and they suggest a link between the Wnt signaling pathway and various other pathways of development and differentiation associated with AP-2␣.