Identification of Pygopus in Drosophila as a dedicated component of the Wg (fly homolog of mammalian Wnt) signaling cascade initiated many inquiries into the mechanism of its function. Surprisingly, the nearly exclusive role for Pygopus in Wg signal transduction in flies is not seen in mice, where Pygopus appears to have both Wnt‐related and Wnt‐independent functions. This review addresses the initial findings of Pygopus as a Wg/Wnt co‐activator in light of recent data from both fly and mammalian studies. We compare (...) and contrast the developmental phenotypes of pygopus mutants to those characterized for known Wg/Wnt transducers and explore the data regarding a role for mammalian Pygopus 2 in tumorigenesis. We further analyze the roles of the two conserved domains of Pygopus proteins in transcription, and propose a model for the molecular mechanism of Pygopus function in both Wg/Wnt signaling and Wnt‐independent transcriptional regulation. BioEssays 30:448–456, 2008. © 2008 Wiley Periodicals, Inc. (shrink)