Axin, a negative regulator of the Wnt signaling pathway, forms a complex with glycogen synthase kinase-3beta (GSK-3beta), beta-catenin, adenomatous polyposis coli (APC) gene product, and Dvl, and it regulates GSK-3beta-dependent phosphorylation in the complex and the stability of beta-catenin. Using yeast two-hybrid screening, we found that regulatory subunits of protein phosphatase 2A, PR61beta and -gamma, interact with Axin. PR61beta or -gamma formed a complex with Axin in intact cells, and their interaction was direct. The binding site of PR61beta on Axin was different from those of GSK-3beta, beta-catenin, APC, and Dvl. Although PR61beta did not affect the stability of beta-catenin, it inhibited Dvl- and beta-catenin-dependent T cell factor activation in mammalian cells. Moreover, it suppressed beta-catenin-induced axis formation and expression of siamois, a Wnt target gene, in Xenopus embryos, suggesting that PR61beta acts either at the level of beta-catenin or downstream of it. Taken together with the previous observations that PR61 interacts with APC and functions upstream of beta-catenin, these results demonstrate that PR61 regulates the Wnt signaling pathway at various steps.