Here we show that interference with the integrity of the transepithelial permeability barrier of mouse mammary epithelial cells by treatment with synthetic peptides, homologous to the second extracellular domain of occludin, decreased the amount of occludin protein present at tight junctions and led to the formation of multilayered, unpolarized cell clusters. In addition, transcription of the adherens junction protein β‐catenin was induced. Following accumulation of soluble β‐catenin protein, transcription by β‐catenin/TCF/LEF was increased, as revealed by transcriptional assays following transient transfection of the reporter construct. Furthermore, treatment with occludin‐II peptides up‐regulated RNA levels of the known β‐catenin/TCF/LEF downstream target gene c‐myc. The data presented imply a functional cross‐talk between tight and adherens junctions that possibly contributes to the stepwise transformation during oncogenesis.