Dishevelled (Dvl) is a key component in the canonical Wnt signaling pathway and becomes hyperphosphorylated upon Wnt stimulation. Dvl is required for LRP6 phosphorylation, which is essential for subsequent steps of signal transduction, such as Axin recruitment and cytosolic β-catenin stabilization. Here, we identify the HECT-containing Nedd4-like ubiquitin E3 ligase ITCH as a new Dvl-binding protein. ITCH ubiquitinates the phosphorylated form of Dvl and promotes its degradation via the proteasome pathway, thereby inhibiting canonical Wnt signaling. Knockdown of ITCH by RNA interference increased the stability of phosphorylated Dvl and upregulated Wnt reporter gene activity as well as endogenous Wnt target gene expression induced by Wnt stimulation. In addition, we found that both the PPXY motif and the DEP domain of Dvl are critical for its interaction with ITCH, as mutation in the PPXY motif (Dvl2-Y568F) or deletion of the DEP domain led to reduced affinity for ITCH. Consistently, overexpression of ITCH inhibited wild-type Dvl2-induced, but not Dvl2-Y568F mutant-induced, Wnt reporter activity. Moreover, the Y568F mutant, but not wild-type Dvl2, can reverse the ITCH-mediated inhibition of Wnt-induced reporter activity. Collectively, these results indicate that ITCH plays a negative regulatory role in modulating canonical Wnt signaling by targeting the phosphorylated form of Dvl.