Polyps of the cnidarian Hydra maintain their adult anatomy through two developmental organizers, the head organizer located apically and the foot organizer basally. The head organizer is made of two antagonistic cross-reacting components, an activator, driving apical differentiation and an inhibitor, preventing ectopic head formation. Here we characterize the head inhibitor by comparing planarian genes down-regulated when β-catenin is silenced to Hydra genes displaying a graded apical-to-basal expression and an up-regulation during head regeneration. We identify Sp5 as a transcription factor that fulfills the head inhibitor properties: leading to a robust multiheaded phenotype when knocked-down in Hydra, acting as a transcriptional repressor of Wnt3 and positively regulated by Wnt/β-catenin signaling. Hydra and zebrafish Sp5 repress Wnt3 promoter activity while Hydra Sp5 also activates its own expression, likely via β-catenin/TCF interaction. This work identifies Sp5 as a potent feedback loop inhibitor of Wnt/β-catenin signaling, a function conserved across eumetazoan evolution.