Cellular adhesive events affect cell proliferation and differentiation decisions. How cell surface events mediating adhesion transduce signals to the nucleus is not well understood. After cell-cell or cell-substratum contact, cytosolic proteins are recruited to clustered adhesion receptor complexes. One such family of cytosolic proteins found at sites of cell adhesion is the Zyxin family of LIM proteins. Here we demonstrate that the family member Ajuba was recruited to the cell surface of embryonal cells, upon aggregate formation, at sites of cell-cell contact. Ajuba contained a functional nuclear export signal and shuttled into the nucleus. Importantly, accumulation of the LIM domains of Ajuba in the nucleus of P19 embryonal cells resulted in growth inhibition and spontaneous endodermal differentiation. The differentiating effect of Ajuba mapped to the third LIM domain, whereas regulation of proliferation mapped to the first and second LIM domains. Ajuba-induced endodermal differentiation of these cells correlated with the capacity to activate c-Jun kinase and required c-Jun kinase activation. These results suggest that the cytosolic LIM protein Ajuba may provide a new mechanism to transduce signals from sites of cell adhesion to the nucleus, regulating cell growth and differentiation decisions during early development.