β-Catenin transduces the Wnt signaling pathway and its nuclear accumulation leads to gene transactivation and cancer. Rac1 GTPase is known to stimulate β-catenin-dependent transcription of Wnt target genes and we confirmed this activity. Here we tested the recent hypothesis that Rac1 augments Wnt signaling by enhancing β-catenin nuclear import; however, we found that silencing/inhibition or up-regulation of Rac1 had no influence on nuclear accumulation of β-catenin. To better define the role of Rac1, we employed proximity ligation assays (PLA) and discovered that a significant pool of Rac1- β-catenin protein complexes redistribute from the plasma membrane to the nucleus upon Wnt or Rac1 activation. More importantly, active Rac1 was shown to stimulate the formation of nuclear β-catenin- lymphoid enhancer factor 1 (LEF-1) complexes. This regulation required Rac1-dependent phosphorylation of β-catenin at specific serines, which when mutated (S191A and S605A) reduced β-catenin binding to LEF-1 by up to 50%, as revealed by PLA and immunoprecipitation experiments. We propose that Rac1-mediated phosphorylation of β-catenin stimulates Wnt-dependent gene transactivation by enhancing β-catenin-LEF-1 complex assembly, providing new insight into the mechanism of cross-talk between Rac1 and canonical Wnt/β-catenin signaling.