Downstream components of the canonical Wnt signaling pathway that result in the nuclear localization of β-catenin are involved in diverse developmental processes including the formation of the mesendoderm, the regulation of axial properties and asymmetric cell divisions in a wide array of metazoans. The nemertean worm, Cerebratulus lacteus, represents a member of the understudied lophotrochozoan clade that exhibits a highly stereotyped spiral cleavage program in which ectodermal, endodermal, and mesodermal origins are known from intracellular fate mapping studies. Here, the embryonic distribution of β-catenin protein was studied using injection of synthetic mRNA, encoding GFP-tagged β-catenin, into fertilized eggs. During the early cleavage stages β-catenin was destabilized/degraded in animal hemisphere blastomeres and became localized to the nuclei of the four vegetal-most cells at the 64-cell stage, which give rise to definitive larval and adult endoderm. Functional assays indicate that β-catenin plays a key role in the development of the endoderm. Morpholino knockdown of endogenous β-catenin, as confirmed by Western analysis, resulted in the failure to gastrulate, absence of the gut and an animalized phenotype in the resulting larvae, including the formation of ectopic (anterior) apical organ tissue with elongated apical tuft cilia and no indications of dorsoventral polarity. Similarly, over-expression of the cytoplasmic domain of cadherin or a β-catenin-engrailed repressor fusion construct prevented endoderm formation and generated the same animalized phenotype. Injections of mRNA encoding either a stabilized, constitutively activated form of β-catenin or a dominant negative form of GSK3-β converted all or nearly all cells into endodermal fates expressing gut-specific esterase. Thus, β-catenin appears to be both necessary and sufficient to promote endoderm formation in C. lacteus, consistent with its role in endoderm and endomesoderm formation in anthozoan cnidarians, ascidians, and echinoderms. Consistent with the results of other studies, β-catenin may be viewed as playing a role in the development of posterior/vegetal larval fates (i.e., endoderm) in C. lacteus. However, unlike the case found in polychaete annelid and soil nematode embryos, there is no evidence for a role of β-catenin in regulating cell fates and asymmetric cell divisions along the entire anterior–posterior axis.