Anchorage-independent growth is a hallmark of tumor growth and results from enhanced proliferation and altered cell-cell and cell-matrix interactions. By using gene-deficient mouse embryonic fibroblasts (MEFs), we showed for the first time that NHERF1/EBP50 (Na/H exchanger regulator factor 1/ezrin-radixin-moesin binding phosphoprotein 50), an adapter protein with membrane localization under physiological conditions, inhibits cell motility and is required to suppress anchorage-independent growth. Both NHERF1 PDZ domains are necessary for the tumor suppressor effect. NHERF1 associates directly through the PDZ2 domain with beta-catenin and is required for beta-catenin localization at the cell-cell junctions in MEFs. Mechanistically, the absence of NHERF1 selectively decreased the interaction of beta-catenin with E-cadherin, but not with N-cadherin. The ensuing disorganization of E-cadherin-mediated adherens junctions as well as the observed moderate increase in beta-catenin transcriptional activity contributed most likely to the anchorage-independent growth of NHERF1-deficient MEFs. In vivo, NHERF1 is specifically localized at the apical brush-border membrane in intestinal epithelial cells and is required to maintain a fraction of the cortical beta-catenin at this level. Thus, NHERF1 emerges as a cofactor essential for the integrity of epithelial tissues by maintaining the proper localization and complex assembly of beta-catenin.