p120 catenin regulates the activity of the Rho family guanosine triphosphatases (including RhoA and Rac1) in an adhesion-dependent manner. Through this action, p120 promotes a sessile cellular phenotype when associated with epithelial cadherin (E-cadherin) or a motile phenotype when associated with mesenchymal cadherins. In this study, we show that p120 also exerts significant and diametrically opposing effects on tumor cell growth depending on E-cadherin expression. Endogenous p120 acts to stabilize E-cadherin complexes and to actively promote the tumor-suppressive function of E-cadherin, potently inhibiting Ras activation. Upon E-cadherin loss during tumor progression, the negative regulation of Ras is relieved; under these conditions, endogenous p120 promotes transformed cell growth both in vitro and in vivo by activating a Rac1-mitogen-activated protein kinase signaling pathway normally activated by the adhesion of cells to the extracellular matrix. These data indicate that both E-cadherin and p120 are important regulators of tumor cell growth and imply roles for both proteins in chemoresistance and targeted therapeutics.