The canonical Wnt pathway (TCF4/β-catenin) has important roles during normal differentiation and in disease. Some Wnt functions depend on signaling gradients requiring the pathway to be tightly regulated. A key Wnt target is the transcription factor ZEB1 whose expression by cancer cells promotes tumor invasiveness by repressing the expression of epithelial specification markers and activating mesenchymal genes, including a number of Wnt targets such as LAMC2 and uPA. The ability of ZEB1 to activate/repress its target genes depends on its recruitment of corepressors (CtBP, BRG1) or coactivators (p300) although conditions under which ZEB1 binds these cofactors are not elucidated. Here, we show that TCF4 and ZEB1 reciprocally modulate each other's transcriptional activity: ZEB1 enhances TCF4/β-catenin-mediated transcription and, in turn, Wnt signaling switches ZEB1 from a repressor into an activator. In colorectal cancer (CRC) cells with active Wnt signaling, ZEB1 enhances transcriptional activation of LAMC2 and uPA by TCF4/β-catenin. However, in CRC cells with inactive Wnt, ZEB1 represses both genes. Reciprocal modulation of ZEB1 and TCF4 activities involves their binding to DNA and mutual interaction. Wnt signaling turns ZEB1 into an activator by replacing binding of CtBP/BRG1 in favor of p300. Using a mouse model of Wnt-induced intestinal tumorigenesis, we found that downregulation of ZEB1 reduces the expression of LAMC2 in vivo. These results identify a mechanism through which Wnt and ZEB1 transcriptional activities are modulated, offering new approaches in cancer therapy.