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The Wnt proteins constitute a large family of extracellular signalling molecules that are found throughout the animal kingdom and are important for a wide variety of normal and pathological developmental processes,. Here we describe Wnt-inhibitory factor-1 (WIF-1), a secreted protein that binds to Wnt proteins and inhibits their activities. WIF-1 is present in fish, amphibia and mammals, and is expressed during Xenopus and zebrafish development in a complex pattern that includes paraxial presomitic mesoderm, notochord, branchial arches and neural crest derivatives. We use Xenopus embryos to show that WIF-1 overexpression affects somitogenesis (the generation of trunk mesoderm segments), in agreement with its normal expression in paraxial mesoderm. In vitro, WIF-1 binds to Drosophila Wingless and Xenopus Wnt8 produced by Drosophila S2 cells. Together with earlier results obtained with the secreted Frizzled-related proteins,, our results indicate that Wnt proteins interact with structurally diverse extracellular inhibitors, presumably to fine-tune the spatial and temporal patterns of Wnt activity.