Aberrant activation of the canonical Wnt signal transduction pathway is involved in many diseases including cancer and is especially implicated in the development and progression of colorectal cancer. The key effector protein of the canonical Wnt pathway is β-catenin, which functions with T-cell factor/lymphoid enhancer factor to activate expression of Wnt target genes. In this study, we used a new functional screen based on cell survival in the presence of cDNAs encoding proteins that activate the Wnt pathway thus identifying novel Wnt signaling components. Here we identify carboxypeptidase E (|CPE) and its splice variant, ΔN-CPE, as novel regulators of the Wnt pathway. We show that whereas ΔN-CPE activates the Wnt signal, the full-length CPE (F-CPE) protein is an inhibitor of Wnt/β-catenin signaling. F-CPE forms a complex with the Wnt3a ligand and the Frizzled receptor. Moreover, F-CPE disrupts disheveled-induced signalosomes that are important for transducing the Wnt signal and reduces β-catenin protein levels and activity. Taken together, our data indicate that F-CPE and ΔN-CPE regulate the canonical Wnt signaling pathway negatively and positively, respectively, and demonstrate that this screening approach can be a rapid means for isolation of novel Wnt signaling components.