Suppressor of fused (Su(fu)) is a negative regulator of the Hedgehog signaling pathway that controls the nuclear-cytoplasmic distribution of Gli/Ci transcription factors through direct protein-protein interactions. We show here that Su(fu) is present in a complex with the oncogenic transcriptional activator beta-catenin and functions as a negative regulator of T-cell factor (Tcf)-dependent transcription. Overexpression of Su(fu) in SW480 (APC(mut)) colon cancer cells in which beta-catenin protein is stabilized leads to a reduction in nuclear beta-catenin levels and in Tcf-dependent transcription. This effect of Su(fu) overexpression can be blocked by treatment of these cells with leptomycin B, a specific inhibitor of CRM1-mediated nuclear export. Overexpression of Su(fu) suppresses growth of SW480 (APC(mut)) tumor cells in nude mice. These observations indicate that Su(fu) negatively regulates beta-catenin signaling and that CRM-1-mediated nuclear export plays a role in this regulation. Our results also suggest that Su(fu) acts as a tumor suppressor.