Local control of cell signaling activity and integration of inputs from multiple signaling pathways are central for normal development but the underlying mechanisms remain poorly understood. Here we show that Dkk2, encoding an antagonist of canonical Wnt signaling, is an essential downstream target of the PITX2 homeodomain transcription factor in neural crest during eye development. Canonical Wnt signaling is ectopically activated in central ocular surface ectoderm and underlying mesenchyme in Pitx2- and Dkk2-deficient mice. General ocular surface ectoderm identity is maintained during development in Dkk2-deficient mice but peripheral fates, including conjunctival goblet cells and eyelash follicles, are ectopically permitted within more central structures and eyelids are hypomorphic. Loss of DKK2 results in ectopic blood vessels within the periocular mesenchyme and PITX2 expression remains persistently high, providing evidence for a negative feedback loop. Collectively, these data suggest that activation of Dkk2 by PITX2 provides a mechanism to locally suppress canonical Wnt signaling activity during eye development, a paradigm that may be a model for achieving local or transient inhibition of pathway activity elsewhere during embryogenesis. We further propose a model placing PITX2 as an essential integration node between retinoic acid and canonical Wnt signaling during eye development.