Sfrp5 belongs to the family of secreted frizzled related proteins (Sfrp), secreted inhibitors of Wingless-MMTV Integration Site (Wnt) signaling, which play an important role in cancer and development. We selected sfrp5 because of its compelling expression profile in the developing endoderm in zebrafish, Danio rerio. In this study, overexpression of sfrp5 in embryos results in defects in both convergent extension (CE) by inhibition of non-canonical Wnt signaling and defects in dorsoventral patterning by inhibition of Tolloid-mediated proteolysis of the BMP inhibitor Chordin. From 25 hours post fertilization (hpf) to 3 days post fertilization (dpf), both overexpression and knockdown of Sfrp5 decrease the size of the endoderm, significantly reducing liver cell number. At 3 dpf, insulin-positive endodermal cells fail to coalesce into a single pancreatic islet. We show that Sfrp5 inhibits both canonical and non-canonical Wnt signaling during embryonic and endodermal development, resulting in endodermal abnormalities.