A central question in Wnt signaling is the regulation of beta-catenin phosphorylation and degradation. Multiple kinases, including CKI alpha and GSK3, are involved in beta-catenin phosphorylation. Protein phosphatases such as PP2A and PP1 have been implicated in the regulation of beta-catenin. However, which phosphatase dephosphorylates beta-catenin in vivo and how the specificity of beta-catenin dephosphorylation is regulated are not clear. In this study, we show that PP2A regulates beta-catenin phosphorylation and degradation in vivo. We demonstrate that PP2A is required for Wnt/beta-catenin signaling in Drosophila. Moreover, we have identified PR55 alpha as the regulatory subunit of PP2A that controls beta-catenin phosphorylation and degradation. PR55 alpha, but not the catalytic subunit, PP2Ac, directly interacts with beta-catenin. RNA interference knockdown of PR55 alpha elevates beta-catenin phosphorylation and decreases Wnt signaling, whereas overexpressing PR55 alpha enhances Wnt signaling. Taken together, our results suggest that PR55 alpha specifically regulates PP2A-mediated beta-catenin dephosphorylation and plays an essential role in Wnt signaling.