Wnt signals control decisive steps in development and can induce the formation of tumors. Canonical Wnt signals control the formation of the embryonic axis, and are mediated by stabilization and interaction of beta-catenin with Lef/Tcf transcription factors. An alternative branch of the Wnt pathway uses JNK to establish planar cell polarity in Drosophila and gastrulation movements in vertebrates. We describe here the vertebrate protein Diversin that interacts with two components of the canonical Wnt pathway, Casein kinase Iepsilon (CKIepsilon) and Axin/Conductin. Diversin recruits CKIepsilon to the beta-catenin degradation complex that consists of Axin/Conductin and GSK3beta and allows efficient phosphorylation of beta-catenin, thereby inhibiting beta-catenin/Tcf signals. Morpholino-based gene ablation in zebrafish shows that Diversin is crucial for axis formation, which depends on beta-catenin signaling. Diversin is also involved in JNK activation and gastrulation movements in zebrafish. Diversin is distantly related to Diego of Drosophila, which functions only in the pathway that controls planar cell polarity. Our data show that Diversin is an essential component of the Wnt-signaling pathway and acts as a molecular switch, which suppresses Wnt signals mediated by the canonical beta-catenin pathway and stimulates signaling via JNK.