Hydra has the ability to regenerate a functional head from gastric tissue into a head organizer. This organizer produces a head activator and a head inhibitor. Wnt3 acts as a head activator, however the head inhibitor remained unknown. Here, we investigated the function of the transcription factor Sp5 as a head inhibitor candidate. Sp5 is mainly expressed in the head of homeostatic animals and re-expressed during regeneration. The knock-down of Sp5 triggers multiple head formation along the body column. In addition, in mammalian cells, we showed that HySp5 expression is under the control of Wnt/β-catenin signaling and that HySp5 inhibits the activity of HyWnt3 promoter, a function seemingly conserved across evolution. Furthermore, our data indicates that HySp5 can activate its own promoter, suggesting that Sp5 acts in an auto-regulatory loop as Wnt3 does. In summary, this work establishes Sp5 as a novel head inhibitor candidate in Hydra.