Frizzled polypeptides are integral membrane proteins that recently were shown to function as receptors for Wnt signaling molecules. Here, we report the identification of a novel, secreted 36-kDa protein that contains a region homologous to a putative Wnt-binding domain of Frizzleds. This protein, called Frizzled-related protein (FRP), was first identified as a heparin-binding polypeptide that copurified with hepatocyte growth factor/scatter factor in conditioned medium from a human embryonic lung fibroblast line. Degenerate oligonucleotides, based on the NH2-terminal sequence of the purified protein, were used to isolate corresponding cDNA clones. These encoded a 313-amino acid polypeptide, containing a cysteine-rich domain of approximately 110 residues that was 30-40% identical to the putative ligand-binding domain of Frizzled proteins. A 4.4-kb transcript of the FRP gene is present in many organs, both in the adult and during embryogenesis, and homologs of the gene are detectable in DNA from several vertebrate species. In biosynthetic studies, FRP was secreted but, like Wnts, tended to remain associated with cells. When coexpressed with several Wnt family members in early Xenopus embryos, FRP antagonized Wnt-dependent duplication of the embryonic dorsal axis. These results indicate that FRP may function as an inhibitor of Wnt action during development and in the adult.