Members of the chromodomain helicase DNA-binding (CHD) family of proteins are thought to regulate gene expression. Among mammalian CHD proteins, CHD8 was originally isolated as a negative regulator of the Wnt-β-catenin signaling pathway that binds directly to β-catenin and suppresses its transactivation activity. The mechanism by which CHD8 inhibits β-catenin-dependent transcription has been unclear, however. Here we show that CHD8 promotes the association of β-catenin and histone H1, with formation of the trimeric complex on chromatin being required for inhibition of β-catenin-dependent transactivation. A CHD8 mutant that lacks the histone H1 binding domain did not show such inhibitory activity, indicating that histone H1 recruitment is essential for the inhibitory effect of CHD8. Furthermore, either depletion of histone H1 or expression of a dominant negative mutant of this protein resulted in enhancement of the response to Wnt signaling. These observations reveal a new mode of regulation of the Wnt signaling pathway by CHD8, which counteracts β-catenin function through recruitment of histone H1 to Wnt target genes. Given that CHD8 is expressed predominantly during embryogenesis, it may thus contribute to setting a threshold for responsiveness to Wnt signaling that operates in a development-dependent manner.