The Wnt gene family encodes highly conserved cysteine-rich proteins which appear to act as secreted developmental signals. Both the mouse Wnt-1 gene and the Drosophila wingless (wg) gene play important roles in central nervous system (CNS) development. wg is also required earlier, in the development of the embryonic metameric body pattern. We have begun to characterize the developmental expression and role of another member of the Drosophila Wnt gene family, DWnt-3. Using antisera raised to the DWnt-3 protein, we show that the protein is secreted in vivo. The early protein expression domains include the limb and appendage primordia. Late expression domains comprise the ventral cord and supraesophageal ganglia of the CNS. Notably, DWnt-3 protein accumulates on the commissural and longitudinal axon tracts of the CNS. Ectopic expression of DWnt-3 in transgenic embryos bearing a HS-DWnt-3 construct leads to specific disruption of the commissural axon tracts of the CNS. We also show that DWnt-3 does not functionally replace wg in an in vivo assay. Experiments with a tissue culture cell line transfected with a construct encoding the DWnt-3 gene show that DWnt-3 protein is efficiently synthesized, glycosylated, proteolytically processed, and transported to the extracellular matrix and medium. DWnt-3, therefore, encodes a secreted protein, which is likely to play a role in development of the Drosophila CNS.