Tracheobronchial submucosal glands (SMGs) are derived from one or more multipotent glandular stem cells that coalesce to form a placode in surface airway epithelium (SAE). Wnt/β-catenin-dependent induction of lymphoid enhancer factor (Lef-1) gene expression during placode formation is an early event required for SMG morphogenesis. We discovered that Sox2 expression is repressed as Lef-1 is induced within airway SMG placodes. Deletion of Lef-1 did not activate Sox2 expression in SMG placodes, demonstrating that Lef-1 activation does not directly inhibit Sox2 expression. Repression of Sox2 protein in SMG placodes occurred post-transcriptionally, since the activity of its endogenous promoter remained unchanged in SMG placodes. Thus, we hypothesized that Sox2 transcriptionally represses Lef-1 expression in the SAE and that suppression of Sox2 in SMG placodes activates Wnt/β-catenin-dependent induction of Lef-1 during SMG morphogenesis. Consistent with this hypothesis, transcriptional reporter assays, ChIP analyses, and DNA-protein binding studies revealed a functional Sox2 DNA binding site in the Lef-1 promoter that is required for suppressing β-catenin-dependent transcription. In polarized primary airway epithelium, Wnt induction enhanced Lef-1 expression while also inhibiting Sox2 expression. Conditional deletion of Sox2 also enhanced Lef-1 expression in polarized primary airway epithelium, but this induction was significantly augmented by Wnt stimulation. Our findings provide the first evidence that Sox2 acts as a repressor to directly modulate Wnt-responsive transcription of the Lef-1 gene promoter. These studies support a model whereby Wnt signals and Sox2 dynamically regulate the expression of Lef-1 in airway epithelia and potentially also during SMG development.