During heart development endocardial cells within the atrio-ventricular (AV) region undergo TGFbeta-dependent epithelial-mesenchymal transformation (EMT) and invade the underlying cardiac jelly. This process gives rise to the endocardial cushions from which AV valves and part of the septum originate. In this paper we show that in mouse embryos and in AV explants TGFbeta induction of endocardial EMT is strongly inhibited in mice deficient for endothelial beta-catenin, leading to a lack of heart cushion formation. Using a Wnt-signaling reporter mouse strain, we demonstrated in vivo and ex vivo that EMT in heart cushion is accompanied by activation of beta-catenin/TCF/Lef transcriptional activity. In cultured endothelial cells, TGFbeta2 induces alpha-smooth muscle actin (alphaSMA) expression. This process was strongly reduced in beta-catenin null cells, although TGFbeta2 induced smad phosphorylation was unchanged. These data demonstrate an involvement of beta-catenin/TCF/Lef transcriptional activity in heart cushion formation, and suggest an interaction between TGFbeta and Wnt-signaling pathways in the induction of endothelial-mesenchymal transformation.