Wnt-1 induces morphological transformation of C57MG mammary epithelial cells and accumulation of cytosolic beta-catenin whereas Wnt-5a has no effect. To identify regions within the 370 amino acid Wnt-1 protein required for these functions we tested eleven chimeric genes that contained variable amounts of Wnt-1 and Wnt-5a sequence. Transformation and beta-catenin regulation in C57MG cells is controlled by amino acids that lie within 186 residues of the amino terminus of Wnt-1. Small substitutions between residues 186 and 292 reduced Wnt-1 activity. Replacement of the carboxy terminal 79 amino acids of Wnt-1 by Wnt-5a did not affect function. These results were supported by transient expression assays in 293 cells wherein beta-catenin accumulated in the cytoplasm in response to ectopic Wnt-1 expression. In 293 cells, a larger region of the amino-terminus of Wnt-1 was found to be required for beta-catenin regulation. Nonfunctional chimeras that contained at least 99 amino terminal Wnt-1 residues inhibited Wnt-1 stimulation of 293 cells. One of these chimeras inhibited both Wnt-1 and Wnt-3 activity suggesting that Wnt-1 and Wnt-3 interact with a common signaling component.