There is growing evidence that Gli proteins participate in the mediation of Hedgehog and FGF signaling in neural and mesodermal development. However, little is known about which genes act downstream of Gli proteins. Here we show the regulation of members of the Wnt family by Gli proteins in different contexts. Our findings indicate that Gli2 regulates Wnt8 expression in the ventral marginal zone of the early frog embryo: activating Gli2 constructs induce ectopic Wnt8 expression in animal cap explants, whereas repressor forms inhibit its endogenous expression in the marginal zone. Using truncated Frizzled and dominant-negative Wnt constructs, we then show the requirement of at least two Wnt proteins, Wnt8 and Wnt11, for Gli2/3-induced posterior mesodermal development. Blocking Wnt signals, however, inhibits Gli2/3-induced morphogenesis, but not mesodermal specification. Gli2/3 may therefore normally coordinate the action of these two Wnt proteins, which regulate distinct downstream pathways. In addition, the finding that Gli1 consistently induces a distinct set of Wnt genes in animal cap explants and in skin tumors suggests that Wnt regulation by Gli proteins is general. Such a mechanism may link signals that induce Gli activity, such as FGFs and Hedgehogs, with Wnt function.