Desmosomes and adherens junctions are intercellular junctions crucial for epithelial cell-cell adhesion and maintenance of normal tissue architecture. Desmoglein 3 (Dsg3), a member of the desmoglein sub-family, serves as an adhesion molecule in desmosomes. Its importance in cell-cell adhesion has been highlighted by the autoimmune blistering disease pemphigus vulgaris, where autoimmune antibodies directed against Dsg3 trigger a cascade of intracellular events, resulting in structural defects and blister formation in the skin and oral mucosa. In addition to its adhesive function, Dsg3 is also acknowledged to have other important roles in the regulation of cell proliferation and differentiation. Our group suggested that Dsg3 is involved in the regulation of keratinocyte stem cell differentiation, but the underlying mechanism(s) were unclear (Wan et al, 2003; Wan et al, 2007). We hypothesise that Dsg3 may be involved in the regulation of the E-cadherin-mediated cell adhesion and the reorganisation of actin cytoskeleton, which in turn contributes to differentiation programs and tissue morphogenesis. Thus, the aim of this study was to examine the interactions between Dsg3, E-cadherin and actin and to explore the underlying signalling pathways that are associated with these intercellular junctions. Using both a gain and loss of Dsg3 functional approaches, I demonstrate that Dsg3 is capable of interacting with E-cadherin and involved in the regulation of calcium-induced E-cadherin junction assembly and the activation of Src signalling pathway. Overexpression of Dsg3 increased E-cadherin/Src signalling with enhanced levels of Src and pSrc co-purified with E-cadherin. Knockdown of Dsg3 inhibited this pathway with reversed effect, suggesting that Dsg3 acts as an upstream regulator of Src signalling in the regulation of E-cadherin-mediated adherens junction formation. In addition, I show another novel function of Dsg3 in promoting actin dynamics through regulating Rac1 and Cdc42-GTPase activities, resulting in pronounced membrane protrusions and enhanced rate of actin turnover. Taken together, my work suggests that Dsg3 play an important signalling role in the assembly of E-cadherin-mediated cell adhesion and the dynamic of actin cytoskeleton.