Beta-catenin undergoes both serine and tyrosine phosphorylation. Serine phosphorylation in the amino terminus targets beta-catenin for proteasome degradation, whereas tyrosine phosphorylation in the COOH terminus influences interaction with E-cadherin. We examined the tyrosine phosphorylation status of beta-catenin in melanoma cells expressing proteasome-resistant beta-catenin, as well as the effects that perturbation of beta-catenin tyrosine phosphorylation had on its association with E-cadherin and on its transcriptional activity. Beta-catenin is tyrosine phosphorylated in three melanoma cell lines and associates with both the ErbB2 receptor tyrosine kinase and the LAR receptor tyrosine phosphatase. Geldanamycin, a drug which destabilizes ErbB2, caused rapid cellular depletion of the kinase and loss of its association with beta-catenin without perturbing either LAR or beta-catenin levels or LAR/beta-catenin association. Geldanamycin also stimulated tyrosine dephosphorylation of beta-catenin and increased beta-catenin/E-cadherin association, resulting in substantially decreased cell motility. Geldanamycin also decreased the nuclear beta-catenin level and inhibited beta-catenin-driven transcription, as assessed using two different beta-catenin-sensitive reporters and the endogenous cyclin D1 gene. These findings were confirmed by transient transfection of two beta-catenin point mutants, Tyr-654Phe and Tyr-654Glu, which, respectively, mimic the dephosphorylated and phosphorylated states of Tyr-654, a tyrosine residue contained within the beta-catenin-ErbB2-binding domain. These data demonstrate that the functional activity of proteasome-resistant beta-catenin is regulated further by geldanamycin-sensitive tyrosine phosphorylation in melanoma cells.