Wingless (Wnt) signaling regulates many aspects of development and tissue homeostasis, and aberrant Wnt signaling can lead to cancer. Upon a Wnt signal beta-catenin degradation is halted and consequently the level of beta-catenin in the cytoplasm increases. This allows entry of beta-catenin into the nucleus where it can regulate gene transcription by direct binding to members of the lymphoid enhancer factor/T cell factor (TCF) family of transcription factors. Recently, we identified Forkhead box-O (FOXO) transcription factors as novel interaction partners of beta-catenin (Essers, M. A., de Vries-Smits, L. M., Barker, N., Polderman, P. E., Burgering, B. M., and Korswagen, H. C. (2005) Science 308, 1181-1184). Here we show that the beta-catenin binding to FOXO serves a dual effect. beta-catenin, through binding, enhances FOXO transcriptional activity. In addition, FOXO competes with TCF for interaction with beta-catenin, thereby inhibiting TCF transcriptional activity. Reduced binding between TCF and beta-catenin is observed after FOXO overexpression and cellular oxidative stress, which simultaneously increases binding between beta-catenin and FOXO. Furthermore, small interfering RNA-mediated knock down of FOXO reverts loss of beta-catenin binding to TCF after cellular oxidative stress. Taken together, these results provide evidence for a cross-talk mechanism between FOXO and TCF signaling in which beta-catenin plays a central regulatory role.