Mitochondrial abundance is dynamically regulated and was previously shown to be increased by Wnt/β-catenin signaling. Pgam5 is a mitochondrial phosphatase which is cleaved by the rhomboid protease presenilin-associated rhomboid- like protein (PARL) and released from membranes after mitochondrial stress. In this study, we show that Pgam5 interacts with the Wnt pathway component axin in the cytosol, blocks axin-mediated β-catenin degradation, and increases β-catenin levels and β-catenin-dependent transcription. Pgam5 stabilized β-catenin by inducing its dephosphorylation in an axin-dependent manner. Mitochondrial stress triggered by carbonyl cyanide m-chlorophenyl hydrazone (CCCP) treatment led to cytosolic release of endogenous Pgam5 and subsequent dephosphorylation of β-catenin, which was strongly diminished in Pgam5 and PARL knockout cells. Similarly, hypoxic stress generated cytosolic Pgam5 and led to stabilization of β-catenin, which was abolished by Pgam5 knockout. Cells stably expressing cytosolic Pgam5 exhibit elevated β-catenin levels and increased mitochondrial numbers. Our study reveals a novel mechanism by which damaged mitochondria might induce replenishment of the mitochondrial pool by cell-intrinsic activation of Wnt signaling via the Pgam5-β-catenin axis.