Dickkopf1 (Dkk1) is a secreted antagonist of the Wnt/β-catenin signaling pathway that acts by direct binding to and inhibiting the Wnt co-receptor LRP6. The related Dkk2, however, can function either as LRP6 agonist or antagonist, depending on the cellular context, suggesting that its activity is modulated by unknown co-factors. We have recently identified the transmembrane proteins Kremen1 and -2 as additional Dkk receptors, which bind to both Dkk1 and Dkk2 with high affinity. Here we show that Kremen2 (Krm2) regulates Dkk2 activity during Wnt signaling. In human 293 fibroblasts transfected dkk2 activates LRP6 signaling. However, co-transfection of krm2 blocks the ability of Dkk2 to activate LRP6 and enhances inhibition of Wnt/Frizzled signaling. Krm2 also co-operates with Dkk4 to inhibit Wnt signaling, but not with Dkk3, which has no effect on Wnt signaling. Likewise, in Xenopus embryos, Dkk2 and Krm2 co-operate in Wnt inhibition leading to anteriorized embryos. Finally, we show that interaction with Krm2 is mediated by the second cysteine-rich domain of Dkks. These results suggest that Krm2 can function as a switch that turns Dkk2 from an activator into an inhibitor of Wnt/lRP6 signaling.