Müllerian duct differentiation and development into the female reproductive tract is essential for fertility, but mechanisms regulating these processes are poorly understood. WNT signaling is critical for proper development of the female reproductive tract as evident by the phenotypes of Wnt4, Wnt5a, Wnt7a, and β-catenin (Ctnnb1) mutant mice. Here we extend these findings by determining the effects of constitutive CTNNB1 activation within the mesenchyme of the developing Müllerian duct and its differentiated derivatives. This was accomplished by crossing Amhr2-Cre knock-in mice with Ctnnb1 exon (ex) 3f/f mice. Amhr2-CreΔ/+; Ctnnb1 ex3f/+ females did not form an oviduct, had smaller uteri, endometrial gland defects, and were infertile. At the cellular level, stabilization of CTNNB1 in the mesenchyme caused alterations within the epithelium, including less proliferation, delayed uterine gland formation, and induction of an epithelial-mesenchymal transition (EMT) event. This EMT event is observed before birth and is complete within 5 days after birth. Misexpression of estrogen receptor α in the epithelia correlated with the EMT before birth, but not after. These studies indicate that regulated CTNNB1 in mesenchyme is important for epithelial cell differentiation during female reproductive tract development.