Platelet endothelial cell adhesion molecule-1 (PECAM-1) binds tyrosine phosphorylated beta-catenin and modulates beta-catenin localization [J. Immunol. 158 (7) (1997) 3408; J. Cell Sci. 112 (Pt 18) (1999) 3005]. To elucidate functional consequences of this interaction, we studied endothelial cells from PECAM-1 knockout animals and compared them to PECAM-1 expressing endothelial cells [Mol. Biol. Cell 11 (9) (2000) 3109]. We noted an increase in the expression of beta-catenin protein in PECAM-1 expressing endothelial cells. Further, by immunofluorescence, beta-catenin localized to the cell membrane as well as to the nucleus in PECAM-1 positive endothelial cells, whereas cells not expressing PECAM-1 stained for beta-catenin only at the membrane. Additionally, we demonstrate that PECAM-1 lacking the majority of the cytoplasmic domain promotes significantly less accumulation of transcriptionally active beta-catenin than full-length PECAM-1. Finally, we note an increased proliferative rate in the PECAM-1 reconstituted cells compared to the endothelial cells lacking PECAM-1. Taken together, our data suggest that PECAM-1, an adhesion molecule, affects cell proliferation via accumulation of transcriptionally active beta-catenin.