Wnt signaling controls a variety of developmental programs but the mechanisms by which the same signal leads to distinct outputs remain unclear. To address this question, we identified stage-specific modulators of Wingless (Wg) signaling in the Drosophila embryonic epidermis. We show that lines (lin) is essential for Wg-dependent patterning in dorsal epidermis. lin encodes a novel protein that acts cell-autonomously, downstream or in parallel to Armadillo (Arm) and upstream of Wg-dependent target genes. Lin can accumulate in nuclei of cells signaled by Wg, suggesting that signaling promotes entry of Lin into the nucleus, where it cooperates with Arm and Pangolin. Thus, a stage-specific modulator is used to mediate Wg signaling activity in dorsal patterning. Hedgehog (Hh) controls half of the parasegmental pattern dorsally and antagonizes Wg function to do so. Lin can accumulate in the cytoplasm of cells signaled by Hh, suggesting that Hh antagonizes Wg function by prohibiting Lin from entering the nucleus.