Cholestatic liver diseases result from impaired bile flow and are characterized by inflammation, atypical ductular proliferation, and fibrosis. The Wnt/β-catenin pathway plays a role in bile duct development, yet its role in cholestatic injury remains indeterminate. Liver-specific β-catenin knockout mice and wild-type littermates were subjected to cholestatic injury through bile duct ligation or short-term exposure to 3,5-diethoxycarbonyl-1,4-dihydrocollidine diet. Intriguingly, knockout mice exhibit a dramatic protection from liver injury, fibrosis, and atypical ductular proliferation, which coincides with significantly decreased total hepatic bile acids (BAs). This led to the discovery of a role for β-catenin in regulating BA synthesis and transport through regulation of farnesoid X receptor (FXR) activation. We show that β-catenin functions as both an inhibitor of nuclear translocation and a nuclear corepressor through formation of a physical complex with FXR. Loss of β-catenin expedited FXR nuclear localization and FXR/retinoic X receptor alpha association, culminating in small heterodimer protein promoter occupancy and activation in response to BA or FXR agonist. Conversely, accumulation of β-catenin sequesters FXR, thus inhibiting its activation. Finally, exogenous suppression of β-catenin expression during cholestatic injury reduces β-catenin/FXR complex activation of FXR to decrease total BA and alleviate hepatic injury. Conclusion: We have identified an FXR/β-catenin interaction whose modulation through β-catenin suppression promotes FXR activation and decreases hepatic BAs, which may provide unique therapeutic opportunities in cholestatic liver diseases. (Hepatology 2018;67:955–971).