Wnt signaling is known to regulate multiple processes including angiogenesis, inflammation, and fibrosis. Here, we identified a novel inhibitor of the Wnt pathway, pigment epithelium-derived factor (PEDF), a multifunctional serine proteinase inhibitor. Both overexpression of PEDF in transgenic mice and administration of PEDF protein attenuated Wnt signaling induced by retinal ischemia. Furthermore, PEDF knockdown by small interfering RNA (siRNA) and PEDF knockout in PEDF ؊/؊ mice induced activation of Wnt signaling. PEDF bound to LRP6, a Wnt coreceptor, with high affinity (K d [dissociation constant] of 3.7 nM) and blocked the Wnt signaling induced by Wnt ligand. The physical interaction of PEDF with LRP6 was confirmed by a coprecipitation assay, which showed that PEDF bound to LRP6 at the E1E2 domain. In addition, binding of PEDF to LRP6 blocked Wnt ligand-induced LRP6-Frizzled receptor dimerization, an essential step in Wnt signaling. These results suggest that PEDF is an endogenous antagonist of LRP6, and blocking Wnt signaling may represent a novel mechanism for its protective effects against diabetic retinopathy.