Wingless/Wnt signalling directs cell-fate choices during embryonic development. Inappropriate reactivation of the pathway causes cancer. In Drosophila, signal transduction from Wingless stabilizes cytosolic Armadillo, which then forms a bipartite transcription factor with the HMG-box protein Drosophila Tcf (dTcf) and activates expression of Wingless-responsive genes. Here we report that in the absence of Armadillo, dTcf acts as a transcriptional repressor of Wingless-responsive genes, and we show that Groucho acts as a corepressor in this process. Reduction of dTcf activity partially suppresses wingless and armadillo mutant phenotypes, leading to derepression of Wingless-responsive genes. Furthermore, overexpression of wild-type dTcf enhances the phenotype of a weak wingless allele. Finally, mutations in the Drosophila groucho gene also suppress wingless and armadillo mutant phenotypes as Groucho physically interacts with dTcf and is required for its full repressor activity.
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