Armadillo, the Drosophila homologue of vertebrate beta-catenin, plays a pivotal role both in Wingless signaling and in assembly of adherens junctions. We performed the first in vivo structure-function study of an adherens junction protein, by generating and examining a series of Armadillo mutants in the context of the entire animal. We tested each mutant by assaying its biological function, its ability to bind proteins that normally associate with Armadillo in adherens junctions, its cellular localization, and its pattern of phosphorylation. We mapped the binding sites for DE-cadherin and alpha-catenin. Although these bind to Armadillo independently of each other, binding of each is required for the function of adherens junctions. We identified two separate regions of Armadillo critical for Wingless signaling. We demonstrated that endogenous Armadillo accumulates in the nucleus and provide evidence that it may act there in transducing Wingless signal. We found that the Arm repeats, which make up the central two-thirds of Armadillo, differ among themselves in their functional importance in different processes. Finally, we demonstrated that Armadillo's roles in adherens junctions and Wingless signaling are independent. We discuss the potential biochemical role of Armadillo in each process.