Regulation of β-catenin stability is essential for Wnt signal transduction during development and tumorigenesis. It is well known that serine-phosphorylation of β-catenin by the Axin–glycogen synthase kinase (GSK)–3β complex targets β-catenin for ubiquitination–degradation, and mutations at critical phosphoserine residues stabilize β-catenin and cause human cancers. How β-catenin phosphorylation results in its degradation is undefined. Here we show that phosphorylated β-catenin is specifically recognized by β-Trcp, an F-box/WD40-repeat protein that also associates with Skp1, an essential component of the ubiquitination apparatus. β-catenin harboring mutations at the critical phosphoserine residues escapes recognition by β-Trcp, thus providing a molecular explanation for why these mutations cause β-catenin accumulation that leads to cancer. Inhibition of endogenous β-Trcp function by a dominant negative mutant stabilizes β-catenin, activates Wnt/β-catenin signaling, and induces axis formation in Xenopus embryos. Therefore, β-Trcp plays a central role in recruiting phosphorylated β-catenin for degradation and in dorsoventral patterning of the Xenopus embryo.