The Dishevelled protein mediates several diverse biological processes. Intriguingly, within the same tissues where Xenopus Dishevelled (Xdsh) controls cell fate via canonical Wnt signaling, it also controls cell polarity via the vertebrate planar cell polarity (PCP) cascade [1, 2, 3, 4, 5, 6, 7, 8 and 9]. The relationship between subcellular localization of Dishevelled and its signaling activities remains unclear; conflicting results have been reported depending upon the organism and cell types examined [8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19 and 20]. We have approached this issue by developing new reagents to sequester wild-type Dishevelled protein either at the cell membrane or away from the cell membrane. Removal of Dishevelled from the cell membrane disrupts convergent extension by preventing Rho/Rac activation and mediolateral cell polarization. By manipulating the subcellular localization of K-->M (dsh1), we show that this mutation inhibits Dishevelled activation of Rac, regardless of its subcellular localization. These data demonstrate that membrane localization of Dishevelled is a prerequisite for vertebrate PCP signaling. However, both membrane-targeted and cytoplasm-targeted Dishevelled can potently activate canonical Wnt signaling, suggesting that local concentration of Dishevelled protein, but not its spatial localization, is central to canonical Wnt signaling. These results suggest that in vertebrate embryos, subcellular localization is insufficient to account for the pathway specificity of Dishevelled in the canonical Wnt versus PCP signaling cascades.