Many developing and adult tissues are comprised of polarized epithelia. Proteins that are asymmetrically distributed in these cells are thought to be localized by protein trafficking. Here we show that the distribution and function of the signaling protein Wingless is predetermined by the subcellular localization of its mRNA. High-resolution in situ hybridization reveals apical transcript localization in the majority of tissues examined. This localization is mediated by two independently acting elements in the 3' UTR. Replacement of these elements with non- or basolaterally localizing elements yields proteins with altered intracellular and extracellular distributions and reduced signaling activities. This novel aspect of the wingless signaling pathway is conserved and may prove to be a mechanism used commonly for establishing epithelial cell polarity.