The Wnt/beta-catenin signaling pathway plays important roles in animal development and cancer. Pygopus (Pygo) and Legless (Lgs) are recently discovered core components of the Wnt/beta-catenin transcription machinery complex, and are crucially involved in the regulation of the transcription of the Arm/beta-catenin and T cell factors (TCF). Lgs/Bcl9 functions as an adaptor between Pygo and Arm/beta-catenin. Here, we report the first crystal structure of the plant homeodomain (PHD) finger of Pygopus (Pygo1 PHD), a Pygo family member, which is essential for the association with Lgs/Bcl9. The Pygo1 PHD structure forms a canonical PHD finger motif, stabilized by two Zn ions coordinated in a cross-brace scheme. Surprisingly, the Pygo1 PHD domain forms a dimer in both the crystals and solution. This is the first structural evidence for dimerization among the known PHD domain structures. The dimer formation occurs by the interactions of antiparallel beta-sheets between the symmetry-related beta3 strands of the monomers. The Pygo1 PHD dimer interface mainly comprises hydrophobic residues. Interestingly, some of the interface residues, such as Met372, Thr373, Ala376 and Leu380, are reportedly important for the association with Lgs/Bcl9 and are also critical for transcriptional activation. The M372A and L380D mutants, and several surrounding mutants such as S385A and A386D, showed decreased ability to form dimers and to interact with the homology domain 1 (HD1) of Lgs/Bcl9. These results suggest that the Pygo1 PHD dimerization is functionally important for Lgs/Bcl9 recognition as well as for the regulation of the Wnt/beta-catenin signaling pathway.