P-cadherin expression is restricted to the basal layer of stratified epithelia including that of the mammary gland. Although evidence for an important role of P-cadherin in mammary morphogenesis and tumorigenesis is increasing, the mechanisms that regulate its expression are poorly understood. We show that in basal mammary epithelial cells, beta-catenin is associated with the P-cadherin promoter and activates its expression independently of LEF/TCF in a cell-type specific manner. Down-regulation of endogenous beta-catenin levels by RNA interference technique inhibited P-cadherin promoter activity. In vivo, in skin and mammary gland of mutant mice, activation of beta-catenin signalling correlates with up-regulation of P-cadherin expression. These data suggest that beta-catenin-dependent modulation of P-cadherin expression can contribute to the establishment of the basal phenotype.