The canonical Wnt pathway is necessary for gut epithelial cell proliferation, and aberrant activation of this pathway causes intestinal neoplasia. We report a novel mechanism by which the Sox family of transcription factors regulate the canonical Wnt signaling pathway. We found that some Sox proteins antagonize while others enhance β-catenin/T-cell factor (TCF) activity. Sox17, which is expressed in the normal gut epithelium but exhibits reduced expression in intestinal neoplasia, is antagonistic to Wnt signaling. When overexpressed in SW480 colon carcinoma cells, Sox17 represses β-catenin/TCF activity in a dose-dependent manner and inhibits proliferation. Sox17 and Sox4 are expressed in mutually exclusive domains in normal and neoplastic gut tissues, and gain- and loss-of-function studies demonstrate that Sox4 enhances β-catenin/TCF activity and the proliferation of SW480 cells. In addition to binding β-catenin, both Sox17 and Sox4 physically interact with TCF/lymphoid enhancer factor (LEF) family members via their respective high-mobility-group box domains. Results from gain- and loss-of-function experiments suggest that the interaction of Sox proteins with β-catenin and TCF/LEF proteins regulates the stability of β-catenin and TCF/LEF. In particular, Sox17 promotes the degradation of both β-catenin and TCF proteins via a noncanonical, glycogen synthase kinase 3β-independent mechanism that can be blocked by proteasome inhibitors. In contrast, Sox4 may function to stabilize β-catenin protein. These findings indicate that Sox proteins can act as both antagonists and agonists of β-catenin/TCF activity, and this mechanism may regulate Wnt signaling responses in many developmental and disease contexts.