Colorectal cancer results from mutations in components of the Wnt pathway that regulate beta-catenin levels. Dishevelled (Dvl or Dsh) signals downstream of Wnt receptors and stabilizes beta-catenin during cell proliferation and embryonic axis formation. Moreover, Dvl contributes to cytoskeletal reorganization during gastrulation and mitotic spindle orientation during asymmetric cell division. Dvl belongs to a family of eukaryotic signalling proteins that contain a conserved 85-residue module of unknown structure and biological function called the DIX domain. Here we show that the DIX domain mediates targeting to actin stress fibres and cytoplasmic vesicles in vivo. Neighbouring interaction sites for actin and phospholipid are identified between two helices by nuclear magnetic resonance spectroscopy (NMR). Mutation of the actin-binding motif abolishes the cytoskeletal localization of Dvl, but enhances Wnt/beta-catenin signalling and axis induction in Xenopus. By contrast, mutation of the phospholipid interaction site disrupts vesicular association of Dvl, Dvl phosphorylation, and Wnt/beta-catenin pathway activation. We propose that partitioning of Dvl into cytoskeletal and vesicular pools by the DIX domain represents a point of divergence in Wnt signalling.