E-cadherin function leads to the density-dependent contact inhibition of cell growth. Because cadherins control the overall state of cell contact, cytoskeletal organization, and the establishment of many other kinds of cell interactions, it remains unknown whether E-cadherin directly transduces growth inhibitory signals. To address this question, we have selectively formed E-cadherin homophilic bonds at the cell surface of isolated epithelial cells by using functionally active recombinant E-cadherin protein attached to microspheres. We find that E-cadherin ligation alone reduces the frequency of cells entering the S phase, demonstrating that E-cadherin ligation directly transduces growth inhibitory signals. E-cadherin binding to beta-catenin is required for cell growth inhibition, but beta-catenin/T-cell factor transcriptional activity is not involved in growth inhibition resulting from homophilic binding. Neither E-cadherin binding to p120-catenin nor beta-catenin binding to alpha-catenin, and thereby the actin cytoskeleton, is required for growth inhibition. E-cadherin ligation also inhibits epidermal growth factor (EGF) receptor-mediated growth signaling by a beta-catenin-dependent mechanism. It does not affect EGF receptor autophosphorylation or activation of ERK, but it inhibits transphosphorylation of Tyr845 and activation of signal transducers and activators of transcription 5. Thus, E-cadherin homophilic binding independent of other cell contacts directly transduces growth inhibition by a beta-catenin-dependent mechanism that inhibits selective signaling functions of growth factor receptors.