Axin2/Conductin/Axil and its ortholog Axin are negative regulators of the Wnt signaling pathway, which promote the phosphorylation and degradation of beta-catenin. While Axin is expressed ubiquitously, Axin2 mRNA was seen in a restricted pattern during mouse embryogenesis and organogenesis. Because many sites of Axin2 expression overlapped with those of several Wnt genes, we tested whether Axin2 was induced by Wnt signaling. Endogenous Axin2 mRNA and protein expression could be rapidly induced by activation of the Wnt pathway, and Axin2 reporter constructs, containing a 5.6-kb DNA fragment including the promoter and first intron, were also induced. This genomic region contains eight Tcf/LEF consensus binding sites, five of which are located within longer, highly conserved noncoding sequences. The mutation or deletion of these Tcf/LEF sites greatly diminished induction by beta-catenin, and mutation of the Tcf/LEF site T2 abolished protein binding in an electrophoretic mobility shift assay. These results strongly suggest that Axin2 is a direct target of the Wnt pathway, mediated through Tcf/LEF factors. The 5.6-kb genomic sequence was sufficient to direct the tissue-specific expression of d2EGFP in transgenic embryos, consistent with a role for the Tcf/LEF sites and surrounding conserved sequences in the in vivo expression pattern of Axin2. Our results suggest that Axin2 participates in a negative feedback loop, which could serve to limit the duration or intensity of a Wnt-initiated signal.