Presenilin 1 (PS1) regulates beta -catenin stability; however, published data regarding the direction of the effect are contradictory. We examined the effects of wildtype and mutant forms of PSI on the membrane, cytoplasmic, nuclear, and signaling pools of endogenous and exogenous beta -catenin by immunofluorescence microscopy, subcellular fractionation, and in a transcription assay. We found that PSI destabilizes the cytoplasmic and nuclear pools of beta -catenin when stabilized by Wnt or Dvl but not when stabilized at lower levels of the Wnt pathway. The PSI mutants examined were less able to reduce the stability of beta -catenin. PSI also inhibited the transcriptional activity of endogenous beta -catenin, and the PSI mutants were again less inhibitory at the level of Dvl but showed a different pattern of inhibition toward transcription below Dvl. The transcriptional activity of exogenously expressed wild-type beta -catenin and two mutants, Delta N89 beta -catenin and Delta ST beta -catenin, were also inhibited by wild-type and mutant PSI. We conclude that PSI negatively regulates the stability and transcriptional activity of beta -catenin at different levels in the Writ pathway, that the effect on transcriptional activity appears to be independent of the GSK-3 beta mediated degradation of beta -catenin, and that mutations in PSI differentially affect the stability and transcriptional activity of beta -catenin.