Proliferation and spatial development of colonic epithelial cells are highly regulated along the crypt vertical axis, which, when perturbed, can result in aberrant growth and carcinogenesis. In this study, two key factors were identified that have important and counterbalancing roles regulating these processes: pericrypt myofibroblast-derived Wnt-5a and the microbial metabolite butyrate. Cultured YAMC cell proliferation and heat shock protein induction were analzyed after butryate, conditioned medium with Wnt5a activity, and FrzB containing conditioned medium. In vivo studies to modulate Hsp25 employed intra-colonic wall Hsp25 encoding lentivirus. To silence Wnt-5a in vivo, intra-colonic wall Wnt-5a silencing RNA was used. Wnt-5a, secreted by stromal myofibroblasts of the lower crypt, promotes proliferation through canonical β-catenin activation. Essential to this are two key requirements: (1) proteolytic conversion of the highly insoluble ~40 kD Wnt-5a protein to a soluble 36 mer amino acid peptide that activates epithelial β-catenin and cellular proliferation, and (2) the simultaneous inhibition of butyrate-induced Hsp25 by Wnt-5a which is necessary to arrest the proliferative process in the upper colonic crypt. The interplay and spatial gradients of these factors insures that crypt epithelial cell proliferation and development proceed in an orderly fashion, but with sufficient plasticity to adapt to physiological perturbations including inflammation.