Wnt signaling is crucial for a variety of biological processes, including body axis formation, planar polarity, stem cell maintenance and cellular differentiation. Therefore, targeted manipulation of Wnt signaling in vivo would be extremely useful. By applying chemical inducer of dimerization (CID) technology, we were able to modify the Wnt co-receptor, low-density lipoprotein (LDL)-receptor-related protein 5 (LRP5), to generate the synthetic ligand inducible Wnt switch, iLRP5. We show that iLRP5 oligomerization results in its localization to disheveled-containing punctate structures and sequestration of scaffold protein Axin, leading to robust β-catenin-mediated signaling. Moreover, we identify a novel LRP5 cytoplasmic domain critical for its intracellular localization and casein kinase 1-dependent β-catenin signaling. Finally, by utilizing iLRP5 as a Wnt signaling switch, we generated the Ubiquitous Activator of β-catenin (Ubi-Cat) transgenic mouse line. The Ubi-Cat line allows for nearly ubiquitous expression of iLRP5 under control of the H-2K(b) promoter. Activation of iLRP5 in isolated prostate basal epithelial stem cells resulted in expansion of p63(+) cells and development of hyperplasia in reconstituted murine prostate grafts. Independently, iLRP5 induction in adult prostate stroma enhanced prostate tissue regeneration. Moreover, induction of iLRP5 in male Ubi-Cat mice resulted in prostate tumor progression over several months from prostate hyperplasia to adenocarcinoma. We also investigated iLRP5 activation in Ubi-Cat-derived mammary cells, observing that prolonged activation results in mammary tumor formation. Thus, in two distinct experimental mouse models, activation of iLRP5 results in disruption of tissue homeostasis, demonstrating the utility of iLRP5 as a novel research tool for determining the outcome of Wnt activation in a precise spatially and temporally determined fashion.