The matrix metalloproteinase-7 (MMP-7) gene is a target of beta-catenin transactivation. Expression of the T-cell factor, Lef-1, enhances transcriptional activation of the human MMP-7 promoter by beta-catenin, but represses activation of the mouse MMP-7 promoter, both activities through consensus Tcf binding sites. The mouse promoter has a single Tcf binding element (mTBE) located downstream of the transcriptional start site, while the human promoter has two Tcf binding elements (hTBE1, hTBE2), both located upstream of the transcriptional start. hTBE1 and hTBE2 also differ in sequence from mTBE. Here we demonstrate that positioning of mTBE, upstream or downstream of the transcriptional start site dictated whether Lef-1 functioned as an activator or repressor, respectively. Sequence differences between mTBE and hTBE sites determined the potency of these activities, with hTBE sites being weaker. Mutational analysis of mTBE showed that increased Lef-1 activity mapped to G . C base pairings at 5' and 3' ends, and correlated with a threefold increase in Lef-1 binding affinity in vitro. Heterologous promoters with high affinity binding sites were 115-fold more responsive to beta-catenin than those with low affinity sites. Converting low affinity Tcf binding sites to high affinity sites increased beta-catenin responsiveness of the mouse and human promoters by 2-3 fold, and ectopic expression of Lef-1 increased beta-catenin responsiveness for promoters with low affinity binding sequences. We concluded that sequence and position of Tcf binding sites can determine the extent of beta-catenin-Lef-1 responsiveness for beta-catenin target genes.