β-Catenin plays two major roles during the development of multicellular organisms. It is the downstream effector of the canonical Wnt signaling cascade, which is involved in many developmental processes and in tumor formation. Additionally, it is linked to classic cadherins and is required for the correct assembly and function of adherens junctions. β-Catenin loss of function mutants show early gastrulation lethality. To address the role of β-catenin in postgastrulation stages and to overcome the early embryonic lethality, we performed conditional gene targeting, using Cdx1::Cre, a newly established mouse line. By this approach, β-catenin was depleted in the entire posterior embryo after the gastrulation process at embryonic day 8.0, when the three germ layers were established. We observed defects in signaling and adhesion which are temporarily separated. At an early event, known targets of Wnt/β-catenin are down-regulated in the paraxial mesoderm. Moreover, Fgf8 and Wnt3a, the key players of the segmentation process, are down-regulated in the neural ectoderm (NE). Wnt3a expression was rescued in mutant embryos by exogenous Fgf and inhibition of Fgf signaling in wild-type embryos resulted in Wnt3a down-regulation. Based on these results, we assume the existence of an autoregulatory feedback loop in the NE where Fgf8 regulates Wnt3a, which in turn, by means of β-catenin, maintains Fgf8 expression. In later stages, the lack of β-catenin caused a progressive posterior disintegration. We found that β-catenin is required for the correct localization of N-cadherin at the membrane of neural ectodermal cells and that its absence causes a disintegration of the neural tube. Developmental Dynamics 239:191–199, 2009. © 2009 Wiley-Liss, Inc.