Regulation of β-catenin degradation by intracellular components of the wnt pathway was reconstituted in cytoplasmic extracts of Xenopus eggs and embryos. The ubiquitin-dependent β-catenin degradation in extracts displays a biochemical requirement for axin, GSK3, and APC. Axin dramatically accelerates while dishevelled inhibits β-catenin turnover. Through another domain, dishevelled recruits GBP/Frat1 to the APC-axin-GSK3 complex. Our results confirm and extend models in which inhibition of GSK3 has two synergistic effects: (1) reduction of APC phosphorylation and loss of affinity for β-catenin and (2) reduction of β-catenin phosphorylation and consequent loss of its affinity for the SCF ubiquitin ligase complex. Dishevelled thus stabilizes β-catenin, which can dissociate from the APC/axin complex and participate in transcriptional activation.