beta-Catenin has a central role in the early axial patterning of metazoan embryos. In the sea urchin, beta-catenin accumulates in the nuclei of vegetal blastomeres and controls endomesoderm specification. Here, we use in-vivo measurements of the half-life of fluorescently tagged beta-catenin in specific blastomeres to demonstrate a gradient in beta-catenin stability along the animal-vegetal axis during early cleavage. This gradient is dependent on GSK3beta-mediated phosphorylation of beta-catenin. Calculations show that the difference in beta-catenin half-life at the animal and vegetal poles of the early embryo is sufficient to produce a difference of more than 100-fold in levels of the protein in less than 2 hours. We show that dishevelled (Dsh), a key signaling protein, is required for the stabilization of beta-catenin in vegetal cells and provide evidence that Dsh undergoes a local activation in the vegetal region of the embryo. Finally, we report that GFP-tagged Dsh is targeted specifically to the vegetal cortex of the fertilized egg. During cleavage, Dsh-GFP is partitioned predominantly into vegetal blastomeres. An extensive mutational analysis of Dsh identifies several regions of the protein that are required for vegetal cortical targeting, including a phospholipid-binding motif near the N-terminus.