beta-Catenin plays a key role in cadherin-mediated cell adhesion as well as in canonical Wnt signaling. To study the role of beta-catenin during eye development, we used conditional Cre/loxP system in mouse to inactivate beta-catenin in developing lens and retina. Inactivation of beta-catenin does not suppress lens fate, but instead results in abnormal morphogenesis of the lens. Using BAT-gal reporter mice, we show that beta-catenin-mediated Wnt signaling is notably absent from lens and neuroretina throughout eye development. The observed defect is therefore likely due to the cytoskeletal role of beta-catenin, and is accompanied by impaired epithelial cell adhesion. In contrast, inactivation of beta-catenin in the nasal ectoderm, an area with active Wnt signaling, results in formation of crystallin-positive ectopic lentoid bodies. These data suggest that, outside of the normal lens, beta-catenin functions as a coactivator of canonical Wnt signaling to suppress lens fate.