Plakoglobin (PKG) is a major component of cell-cell adhesive junctions. It is also closely related to the Drosophila segment polarity gene product armadillo and can induce a WNT-like neural axis duplication (NAD) phenotype in Xenopus [Karnovsky and Klymkowsky, 1995].* To define the regions of PKG involved in cell adhesion and inductive signaling, we examined the behavior of mutated forms of PKG in Xenopus. Deletion of amino acids 22 through 39 (in the Xenopus PKG sequence) increased the apparent stability of the polypeptide within the embryo and increased its ability to induce a WNT-like, NAD phenotype when expressed in the vegetal hemisphere. The N-terminal ''head'' and first 6 ''ARM'' repeats of PKG, or the C-terminal ''tail'' and the last 3 ''ARM'' repeats, could be removed without destroying the remaining polypeptide's ability to induce a NAD phenotype. The nuclear localization of mutant PKGs, however, was not strictly correlated with the ability to induce a NAD phenotype, i.e., some inactive polypeptides still accumulate in nuclei. Removal of PKG's head and first ARM repeat, which includes its a-catenin binding site, resulted in a polypeptide that, when expressed in the embryo, generated a dramatic cell adhesion defect. Removal of the next three ARM repeats abolished this adhesion defect, suggesting that the polypeptide no longer competes effectively with endogenous catenins for binding to cadherins. Expression of a form of PKG truncated after the 5th ARM repeat produced a milder cell adhesion defect, whereas expression of a polypeptide truncated after the 8th ARM repeat had little apparent effect on cellular adhesion. Based on these observations, we conclude that functions related to stability and cellular adhesion reside in the N-terminal region of the polypeptide, whereas the ability to induce a NAD phenotype lies within repeats 6-10 of the central region. The function(s) of the C-terminal domain of PKG remain uncertain at this time. Dev.