Actomyosin contractility can influence the canonical Wnt signaling pathway in processes like mesoderm differentiation and tissue stiffness during tumorigenesis. We identified that increased nonmuscle myosin II activation and cellular contraction inhibited Wnt target gene transcription in developing Drosophila imaginal disks. Genetic interactions studies were used to show that this effect was due to myosin-induced accumulation of cortical F-actin resulting in clustering and accumulation of E-cadherin to the adherens junctions. This results in E-cadherin titrating any available β-catenin, the Wnt pathway transcriptional coactivator, to the adherens junctions in order to maintain cell-cell adhesion under contraction. We show that decreased levels of cytoplasmic β-catenin result in insufficient nuclear translocation for full Wnt target gene transcription. Previous studies have identified some of these interactions, but we present a thorough analysis using the wing disk epithelium to show the consequences of modulating myosin phosphatase. Our work elucidates a mechanism in which the dynamic promotion of actomyosin contractility refines patterning of Wnt transcription during development and maintenance of epithelial tissue in organisms.