The cadherin/catenin complex mediates Ca²⁺-dependent cell-cell interactions that are essential for normal developmental processes. It has been proposed that sorting of cells during embryonic development is due, at least in part, to expression of different cadherin family members or to expression of differing levels of a single family member. Expression of dominant-negative cadherins has been used experimentally to decrease cell-cell interactions in whole organisms and in cultured cells. In this study, we elucidated the mechanism of action of extracellular domain-deleted dominant-negative cadherin, showing that it is not cadherin isotype-specific, and that it must be membrane-associated but the orientation within the membrane does not matter. In addition, membranetargeted cytoplasmic domain cadherin with the cateninbinding domain deleted does not function as a dominantnegative cadherin. Expression of extracellular domain-deleted dominant-negative cadherin results in down-regulation of endogenous cadherins which presumably contributes to the non-adhesive phenotype.