Hyperactivation of Wnt/β-catenin signaling is one of the major causes of human colorectal cancer (CRC). A hallmark of Wnt signaling is the nuclear accumulation of β-catenin. Although β-catenin nuclear import and export have been widely investigated, the underlying mechanism of β-catenin's nuclear retention remains largely unknown. Here, we report that Twa1/Gid8 is a key nuclear retention factor for β-catenin during Wnt signaling and colorectal carcinogenesis. In the absence of Wnt, Twa1 exists together with β-catenin in the Axin complex and undergoes ubiquitination and degradation. Upon Wnt signaling, Twa1 translocates into the nucleus, where it binds and retains β-catenin. Depletion of Twa1 attenuates Wnt-stimulated gene expression, dorsal development of zebrafish embryos and xenograft tumor growth of CRC cells. Moreover, nuclear Twa1 is significantly upregulated in human CRC tissues, correlating with the nuclear accumulation of β-catenin and poor prognosis. Thus, our results identify Twa1 as a previously undescribed regulator of the Wnt pathway for promoting colorectal tumorigenesis by facilitating β-catenin nuclear retention.