PITX2, beta-catenin and lymphoid enhancer factor (LEF-1) are required for the inductive formation of several epithelial-derived organs, including teeth. Lef-1 is expressed in the dental epithelium after Pitx2, and both factors have overlapping expression patterns in the tooth bud and cap stages. Our analysis of Pitx2-/- mutant mice showed reduced Lef-1 expression in facial tissues by RT-PCR and quantitative RT-PCR. Consistent with these results we show that the human 2.5 kb LEF-1 promoter is activated by PITX2. Furthermore, the LEF-1 promoter is differentially activated by PITX2 isoforms, which are co-expressed in dental epithelium. The 2.5 kb LEF-1 promoter contains two regions that act to inhibit its transcription in concert with PITX2. The proximal region contains a Wnt-responsive element (WRE) that attenuates PITX2 activation. LEF-1 cannot autoregulate LEF-1 expression; however co-transfection of PITX2 and LEF-1 result in a synergistic activation of the 2.5 kb LEF-1 promoter. LEF-1 specifically interacts with the PITX2 C-terminal tail. Deletion of a distal 800 bp segment of the LEF-1 promoter resulted in enhanced PITX2 activation, and increased synergistic activation in the presence of LEF-1. Furthermore, beta-catenin in combination with PITX2 synergistically activates the LEF-1 promoter and this activation is independent of the Wnt-responsive element. beta-catenin directly interacts with PITX2 to synergistically regulate LEF-1 expression. We show a new mechanism where LEF-1 expression is regulated through PITX2, LEF-1 and beta-catenin direct physical interactions. LEF-1 and beta-catenin interactions with PITX2 provide new mechanisms for the regulation of PITX2 transcriptional activity.