To assess the critical role of Wnt signals in intestinal crypts, we generated transgenic mice ectopically expressing Dickkopf1 (Dkk1), a secreted Wnt inhibitor. We find that epithelial proliferation is greatly reduced coincidentally with the loss of crypts. Although enterocyte differentiation appears unaffected, secretory cell lineages are largely absent. Disrupted intestinal homeostasis is reflected by an absence of nuclear β-catenin, inhibition of c-myc expression, and subsequent up-regulation of p21^CIP1/WAF1. Thus, our data are the first to establish a direct requirement for Wnt ligands in driving proliferation in the intestinal epithelium, and also define an unexpected role for Wnts in controlling secretory cell differentiation.