Tissues that undergo rapid cellular turnover, such as the mammalian haematopoietic system or the intestinal epithelium, are dependent on stem and progenitor cells that proliferate to provide differentiated cells to maintain organismal health. Stem and progenitor cells, in turn, are thought to rely on signals and growth factors provided by local niche cells to support their function and self-renewal. Several cell types have been hypothesized to provide the signals required for the proliferation and differentiation of the intestinal stem cells in intestinal crypts^{, , , , –}. Here we identify subepithelial telocytes as an important source of Wnt proteins, without which intestinal stem cells cannot proliferate and support epithelial renewal. Telocytes are large but rare mesenchymal cells that are marked by expression of FOXL1 and form a subepithelial plexus that extends from the stomach to the colon. While supporting the entire epithelium, FOXL1⁺ telocytes compartmentalize the production of Wnt ligands and inhibitors to enable localized pathway activation. Conditional genetic ablation of porcupine (Porcn), which is required for functional maturation of all Wnt proteins, in mouse FOXL1⁺ telocytes causes rapid cessation of Wnt signalling to intestinal crypts, followed by loss of proliferation of stem and transit amplifying cells and impaired epithelial renewal. Thus, FOXL1⁺ telocytes are an important source of niche signals to intestinal stem cells.