In most mammals, sex is determined by the presence or absence of the SRY gene. SRY encodes a DNA binding HMG-box transcription factor which, during embryogenesis, is the initial trigger of testis differentiation from the bipotential gonad, yet its precise mode of function remains unclear. In ovarian development, R-spondin1 and Wnt4 act through the Wnt/β-catenin signaling pathway to regulate TCF-dependent expression of unknown target genes and repress testis development. Conversely, SRY may be necessary to prevent the development of ovaries by inhibiting the action of ovarian-determining genes. We hypothesize that SRY prevents Wnt/β-catenin signaling, thereby inhibiting ovarian development. In HEK293T cells, SRY repressed β-catenin-mediated TCFdependent gene activation in the presence of a specific GSK3β inhibitor or an activated β-catenin mutant, suggesting that SRY inhibits Wnt signaling at the level of β-catenin. Three SRY mutant proteins with nuclear localization defects, encoded by XY male-to-female patients, failed to inhibit β-catenin; surprisingly four SRY sex reversed mutants with defective DNA binding activity showed near wild-type SRY inhibitory activity. Moreover the potent transactivator SRY-VP16 fusion protein also showed wild-type SRY inhibitory activity. Thus SRY inhibition of β-catenin involves neither DNA binding nor transactivation functions of SRY. β-catenin and SRY interact in-vitro and SRY expression triggered β-catenin localization into specific nuclear bodies in NT2/D1 and Hela cells. We conclude that SRY inhibits β-catenin-mediated Wnt signaling by a novel nuclear function of SRY that could be important in sex determination.