Epithelial cell-cell junctions, organized by adhesion proteins and the underlying actin cytoskeleton, are considered to be stable structures maintaining the structural integrity of tissues. Contrary to the idea that α-catenin links the adhesion protein E-cadherin through β-catenin to the actin cytoskeleton, in the accompanying paper we report that α-catenin does not bind simultaneously to both E-cadherin-β-catenin and actin filaments. Here we demonstrate that α-catenin exists as a monomer or a homodimer with different binding properties. Monomeric α-catenin binds more strongly to E-cadherin-β-catenin, whereas the dimer preferentially binds actin filaments. Different molecular conformations are associated with these different binding states, indicating that α-catenin is an allosteric protein. Significantly, α-catenin directly regulates actin-filament organization by suppressing Arp2/3-mediated actin polymerization, likely by competing with the Arp2/3 complex for binding to actin filaments. These results indicate a new role for α-catenin in local regulation of actin assembly and organization at sites of cadherin-mediated cell-cell adhesion.