This paper describes the identification of a new family of mammalian genes that encode secreted proteins containing homology to the cysteine-rich ligand-binding domain found in the frizzled family of transmembrane receptors. The secreted frizzled-related proteins (sFRPs) are approximately 30 kDa in size, and each contains a putative signal sequence, a frizzled-like cysteine-rich domain, and a conserved hydrophilic carboxy-terminal domain. The sFRPs are not the products of differential splicing of the known frizzled genes. Glycosylphosphatidylinositol-anchored derivatives of sFRP-2 and sFRP-3 produced in transfected human embryonic kidney cells confer cell-surface binding by the Drosophila Wingless protein. These observations suggest that sFRPs may function in vivo to modulate Wnt signaling, or, alternatively, as novel ligands for as yet unidentified receptors.