The mechanism by which Wnt receptors transduce signals to activate downstream 
beta-catenin-mediated target gene transcription remains incompletely understood 
but involves Frizzled (Fz) receptor-mediated plasma membrane recruitment and 
activation of the cytoplasmic effector Dishevelled (Dvl). Here, we identify the 
deubiquitinating enzyme CYLD, the familial cylindromatosis tumor suppressor 
gene, as a negative regulator of proximal events in Wnt/beta-catenin signaling. 
Depletion of CYLD from cultured cells markedly enhances Wnt-induced accumulation 
of beta-catenin and target gene activation. Moreover, we demonstrate hyperactive 
Wnt signaling in human cylindroma skin tumors that arise from mutations in CYLD. 
At the molecular level, CYLD interacts with and regulates K63-linked 
ubiquitination of Dvl. Enhanced ubiquitination of the polymerization-prone DIX 
domain in CYLD-deficient cells positively links to the signaling activity of 
Dvl. Together, our results argue that loss of CYLD instigates tumor growth in 
human cylindromatosis through a mechanism in which hyperubiquitination of 
polymerized Dvl drives enhancement of Wnt responses.