The Wnt signaling pathway plays critical roles in embryonic development and tumorigenesis. Stimulation of the Wnt pathway results in the accumulation of a nuclear β-catenin/Tcf complex, activating Wnt target genes. A crystal structure of β-catenin bound to the β-catenin binding domain of Tcf3 (Tcf3-CBD) has been determined. The Tcf3-CBD forms an elongated structure with three binding modules that runs antiparallel to β-catenin along the positively charged groove formed by the armadillo repeats. Structure-based mutagenesis defines three sites in β-catenin that are critical for binding the Tcf3-CBD and are differentially involved in binding APC, cadherin, and Axin. The structural and mutagenesis data reveal a potential target for molecular drug design studies.