Mesenchymal cells that accumulate during the proliferative phase of wound healing and that are present in hyperplastic wounds share cytologic similarities with the cells from fibroproliferative lesions in which there is activation of beta-catenin-mediated transcription. Re-excision wounds from a previous biopsy and samples from hyperplastic cutaneous wounds were studied along with normal tissues. During normal wound healing, there was an increase in beta-catenin protein level, peaking 4 weeks following the insult and returning towards baseline level by 12 weeks. Hyperplastic wounds exhibited a prolonged duration of elevated beta-catenin, lasting more than 2 years following the initial injury. The level of expression of genes known to be upregulated in the proliferative phase of wound healing (alpha-smooth muscle actin and type three collagen), correlated with beta-catenin protein level. The phosphorylation level of glycogen synthase kinase-3-beta, a kinase important for beta-catenin protein destabilization, correlated with beta-catenin protein level. Beta-catenin was transcriptionally active in these wounds as demonstrated by the expression of the beta-catenin target genes (MMP-7 and FN) and by activation of a tcf-reporter in primary cell cultures. Beta-catenin stabilization increases cell proliferation and motility in fibroblasts in vitro, and likely has a similar function during its transient elevation in the proliferative phase of normal wound healing. In hyperplastic wounds, there is dysregulation of beta-catenin, maintaining the mesenchymal cells in a prolonged proliferative state. As such, beta-catenin likely plays a central role in mesenchymal cells during the healing process, and is an appealing therapeutic target for disorders of wound healing.