The cysteine protease calpain 3 (CAPN3) is essential for normal muscle function, since mutations in CAPN3 cause limb girdle muscular dystrophy type 2A. Previously, we showed that myoblasts isolated from CAPN3 knockout (C3KO) mice were able to fuse to myotubes; however, sarcomere formation was disrupted. In this study we further characterized morphological and biochemical features of C3KO myotubes in order to elucidate a role for CAPN3 during myogenesis. We showed that cell cycle withdrawal occurred normally in C3KO cultures, but C3KO myotubes have an increased number of myonuclei per myotube. We found that CAPN3 acts during myogenesis to specifically control levels of membrane-associated but not cytoplasmic β-catenin and M-cadherin. CAPN3 was able to cleave both proteins, and in the absence of CAPN3, M-cadherin and β-catenin abnormally accumulated at the membranes of myotubes. Given the role of M-cadherin in myoblast fusion, this finding suggests that the excessive myonuclear index of C3KO myotubes was due to enhanced fusion. Postfusion events, such as β1D integrin expression and myofibrillogenesis, were suppressed in C3KO myotubes. These data suggest that the persistence of fusion observed in C3KO cells inhibits subsequent steps of differentiation, such as integrin complex rearrangements and sarcomere assembly.