Maintenance of stem/progenitor cell-progeny relationships is required for tissue homeostasis during normal turnover and repair. Wnt signaling is implicated in both maintenance and differentiation of adult stem/progenitor cells, yet how this pathway serves these dichotomous roles remains enigmatic.Wepreviously proposed a model suggesting that specific interaction of β-catenin with either of the homologous Kat3 co- Activators, p300 or CREB-binding protein, differentially regulates maintenance versus differentiation of embryonic stem cells. Limited knowledge of endogenous mechanisms driving differential β-catenin/co- Activator interactions and their role in adult somatic stem/progenitor cell maintenance versus differentiation led us to explore this process in defined models of adult progenitor cell differentiation. We focused primarily on alveolar epithelial type II (AT2) cells, progenitors of distal lung epithelium, and identified a novel axis whereby WNT5a/protein kinaseC(PKC) signaling regulates specificβ-catenin/co- Activator interactions to promote adult progenitor cell differentiation. p300/β-catenin but not CBP/β-catenin interaction increases as AT2 cells differentiate to a type I (AT1) cell-like phenotype. Additionally, p300 transcriptionally activates AT1 cell-specific gene Aqp-5. IQ-1, a specific inhibitor of p300/β-catenin interaction, prevents differentiation of not only primary AT2 cells, but also tracheal epithelial cells, and C2C12 myoblasts. p300 phosphorylation at Ser-89 enhances p300/β-catenin interaction, concurrent with alveolar epithelial cell differentiation. WNT5a, a traditionally non-canonical WNT ligand regulates Ser-89 phosphorylation and p300/β-catenin interactions in a PKC-dependent manner, likely involving PKCβ. These studies identify a novel intersection of canonical and non-canonical Wnt signaling in adult progenitor cell differentiation that has important implications for targeting β-catenin to modulate adult progenitor cell behavior in disease.