It has been shown that accumulation of free beta-catenin leads to mobility shift of adenomatous polyposis coli (APC) protein and that Axin facilitates this process. Here we show that the beta-catenin-mediated mobility shift of APC is due to phosphorylation of two domains of APC by casein kinase 1 epsilon/glycogen synthase kinase 3 and unknown kinase(s), respectively. Interestingly, our results suggest that this process does not require Axin. The phosphorylated APC showed higher affinity to beta-catenin in vivo, and fragments of APC containing the phosphorylated domains can inhibit beta-catenin/Tcf-mediated reporter activity regardless of their ability to reduce the level of beta-catenin. From our data we propose a new role of APC: accumulation of excessive cytoplasmic beta-catenin induces phosphorylation of APC and the phosphorylated APC retains beta-catenin in cytoplasm to prevent excessive beta-catenin signaling. The retained beta-catenin in cytoplasm by APC may be down-regulated by Axin 2, which is induced by beta-catenin/Tcf signaling. (c) 2007 Elsevier Inc. All rights reserved.