To gain insight into the mechanism by which Gli-similar 2 (Glis2) regulates transcription, we performed yeast-two hybrid cDNA library screening using Glis2 as bait. This screening identified β-catenin as a potential Glis2-interacting protein. Mammalian two-hybrid, co-immunoprecipitation, and GST-pulldown analyses supported the interaction between Glis2 and β-catenin. Pulldown analyses with several Glis2 deletion mutants indicated that the 1st zinc finger motif of Glis2 is critical for its interaction with β-catenin, while the armadillo repeats of β-catenin are important in its interaction with Glis2. Reporter analyses showed that Glis2 represses T-cell factor (TCF)-mediated transcriptional activation. In addition, Glis2 represses the expression of the TCF target gene cyclin D1. Our results indicate that Glis2 interacts with β-catenin and suggest that Glis2 functions as a negative modulator of β-catenin/TCF-mediated transcription.