Calcium-dependent homotypic cell-cell adhesion, mediated by molecules such as E-cadherin, guides the establishment of classical epithelial cell polarity and contributes to the control of migration, growth, and differentiation. These actions involve additional proteins, including alpha- and beta-catenin (or plakoglobin) and p120, as well as linkage to the cortical actin cytoskeleton. The molecular basis for these interactions and their hierarchy of interaction remain controversial. We demonstrate a direct interaction between F-actin and alpha (E)-catenin, an activity not shared by either the cytoplasmic domain of E-cadherin or beta-catenin. Sedimentation assays and direct visualization by transmission electron microscopy reveal that alpha 1(E)-catenin binds and bundles F-actin in vitro with micromolar affinity at a catenin/G-actin monomer ratio of approximately 1:7 (mol/mol). Recombinant human beta-catenin can simultaneously bind to the alpha-catenin/actin complex but does not bind actin directly. Recombinant fragments encompassing the amino-terminal 228 residues of alpha 1(E)-catenin or the carboxyl-terminal 447 residues individually bind actin in cosedimentation assays with reduced affinity compared with the full-length protein, and neither fragment bundles actin. Except for similarities to vinculin, neither region contains sequences homologous to established actin-binding proteins. Collectively these data indicate that alpha 1 (E)-catenin is a novel actin-binding and -bundling protein and support a model in which alpha 1(E)-catenin is responsible for organizing and tethering actin filaments at the zones of E-cadherin-mediated cell-cell contact.