Aberrant activation of beta-catenin signaling has been implicated in the development of human cancers. As a Wnt signal transducer, beta-catenin forms a complex with the lymphocyte enhancer-binding factor/T cell factor transcription factor and activates downstream targets that promote cell proliferation. Here we developed a Wnt-dependent beta-catenin-mediated heterologous transactivation system, which consisted of a chimeric transcription factor constructed by fusing the GAL4 DNA-binding domain with the full-length beta-catenin, and a GAL4-responsive reporter expressing GFP. The chimeric transcription factor was highly unstable and exerted no detectable transactivating effect on the GAL4-responsive reporter. However, lithium and Wnt1 significantly stabilized this chimeric transactivator, indicating that this transactivation system is regulated by beta-catenin in a Wnt-responsive fashion. Thus, this transactivation system could be used as a functional reporter to identify potential upstream factors that deregulate beta-catenin signaling during tumorigenesis, as well as to screen for potential anti-cancer agents that specifically inhibit beta-catenin signaling in human tumors.