Adenomatous polyposis coli (APC) mutations are present in >70% of colon cancers. The APC protein binds to beta-catenin (beta-cat), a protein first identified because of its role in E-cadherin (E-cad) cell adhesion. In some colon cancers lacking APC defects, mutations in presumptive glycogen synthase kinase 3beta phosphorylation sites near the beta-cat NH2 terminus appear to render beta-cat resistant to regulation by APC and glycogen synthase kinase 3beta. In cells with APC or beta-cat defects, beta-cat is stabilized and, in turn, binds to and activates T-cell factor (Tcf)/lymphoid enhancer factor (Lef) transcription factors. To further explore the role of APC, beta-cat, Tcf, and E-cad defects in gastrointestinal cancers, we assessed gastric and pancreatic cancers for constitutive Tcf transcriptional activity (CTTA). Two of four gastric and two of eight pancreatic cancer lines showed CTTA. One gastric and one pancreatic cancer had mutations in the NH2-terminal phosphorylation sites of beta-cat. The other gastric cancer with CTTA had a missense mutation at serine 28 of gamma-cat, a potential phosphorylation site in this beta-cat-related protein. Although E-cad is an important binding partner for beta-cat and gamma-cat, E-cad inactivation did not result in CTTA. The beta-cat and gamma-cat mutant proteins identified in our studies strongly activated Tcf transcription in vitro, whereas beta-cat mutant proteins with large NH2-terminal deletions had only modest effects on Tcf. Our results suggest a role for Tcf deregulation in gastric and pancreatic cancer, resulting from beta-cat and gamma-cat mutations in some cases and, in others, from yet to be defined defects. Furthermore, these data imply that the consequences of APC and beta-cat mutations are distinct from the effects of E-cad inactivation.