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Secreted frizzled-related proteins (SFRPs), the first identified Wnt antagonists, have been well recognized as tumor suppressors in multiple human cancers through suppressing the Wnt/β-catenin pathway. To better elucidate the mechanisms of SFRPs involved in the carcinogenesis of oral submucous fibrosis (OSF), one of the precancerous lesions of oral squamous cell carcinoma (OSCC), we investigated expression and localization of SFRP1, SFRP5, and β-catenin in normal oral epithelium, OSF, and OSCC tissues. We found that SFRP1 and SFRP5 were readily expressed in normal oral mucous tissues but gradually decreased in OSF early, moderately advanced, and advanced tissues and rarely expressed in OSCC tissues. We found the changes of SFRP1 localization and SFRP5 localization from nucleus to cytoplasm in the carcinogenesis of OSF. There is a significant association among reduced SFRP1, SFRP5, and cytoplasmic/nuclear β-catenin expression, which is correlated with higher tumor grade and stage of OSCC. We further found that SFRP1 and SFRP5 were frequently methylated in OSCC cases with betel quid chewing habit but not in normal oral mucous and different stages of OSF tissues, suggesting that methylation of SFRP1 and SFRP5 is tumor specific in the carcinogenesis of OSF. Taken together, our data demonstrated that reduced SFRP1 and SFRP5 by promoter methylation could lead to cytoplasmic/nuclear accumulation of β-catenin and tumor progression. The changes of SFRPs and β-catenin localization, as well as SFRPs’ methylation, could be useful predictors or biomarkers of OSF malignant progression and prognosis.