Drosophila Armadillo and its vertebrate homolog beta-catenin play essential roles both in the transduction of Wingless/Wnt cell-cell signals and in the function of cell-cell adherens junctions. Wingless and Wnts direct numerous cell fate choices during development. We generated a mutant protein, Armadillo(S10), with a 54 amino acid deletion in its N-terminal domain. This mutant is constitutively active in Wingless signaling; its activity is independent of both Wingless signal and endogenous wild-type Armadillo. Armadillo's role in signal transduction is normally negatively regulated by Zeste-white 3 kinase, which modulates Armadillo protein stability. Armadillo(S10) is more stable than wild-type Armadillo, suggesting that it is less rapidly targeted for degradation. We show that Armadillo(S10) has escaped from negative regulation by Zeste white-3 kinase, and thus accumulates outside junctions even in the absence of Wingless signal. Finally, we present data implicating kinases in addition to Zeste white-3 in Armadillo phosphorylation. We discuss two models for the negative regulation of Armadillo in normal development and discuss how escape from this regulation contributes to tumorigenesis.