Wnt signaling pathways play essential roles in patterning and proliferation of embryonic and adult tissues. In many organisms, this signaling pathway directs axis formation. Although the importance of intracellular components of the pathway, including beta-catenin and Tcf3, has been established, the mechanism of their activation is uncertain. In Xenopus, the initiating signal that localizes beta-catenin to dorsal nuclei has been suggested to be intracellular and Wnt independent. Here, we provide three lines of evidence that the pathway specifying the dorsal axis is activated extracellularly in Xenopus embryos. First, we identify Wnt11 as the initiating signal. Second, we show that activation requires the glycosyl transferase X.EXT1. Third, we find that the EGF-CFC protein, FRL1, is also essential and interacts with Wnt11 to activate canonical Wnt signaling.