Activation of Wnt/ß-catenin target genes is regulated by a heterodimer of ß-catenin and the HMG-box transcription factors of the Lef/Tcf family. In vertebrates four Lef/Tcf family members have been identified. They all contain a conserved ß-catenin binding motif at the N-terminus and a highly conserved HMG-box for DNA binding. The core sequence between these motifs is less conserved and contributes to the specific properties of the individual family members. In order to identify interacting proteins that allocate specific functions to the individual Lef/Tcf transcription factors we performed a yeast two hybrid screen using the less conserved core sequence as bait. We isolated the murine LIM protein Hic-5 (hydrogen peroxide induced clone 5) also termed ARA-55 (androgen-receptor activator-55) and cloned the highly conserved Xenopus homologue. In addition we report that the LIM domains containing C-terminal half of Hic-5 binds to a conserved alternatively spliced Exon in Lef/Tcf transcription factors. Our functional analyses reveal that Hic-5 acts as negative regulator on a subset of Lef/Tcf-family members, which have been characterized as activators in reporter gene analyses and in the Xenopus axis induction assay. In addition we observed a repressive interference of Lef/Tcf family members on Hic-5 mediated activation of glucocorticoid- driven transcription which again could be allocated to specific Lef/Tcf subtypes. With the characterization of Hic-5 as binding partner of the alternatively spliced Exon in Lef/Tcf transcription factors we identified a novel molecular mechanism in the dialogue of steroid and canonical Wnt signaling which is Lef/Tcf subtype dependent.