In an effort to isolate novel growth factors, we identified a human protein, designated Sk, that co-eluted with Neuregulin during chromatographic separation of conditioned medium from the SK-LMS-1 human leiomyosarcoma cell line. Degenerate oligonucleotides based on amino-terminal sequence analysis of the purified protein were used to isolate the corresponding cDNA from a library generated from this cell line. Sk is a novel 266-amino acid protein that contains a signal peptide sequence and two cysteine-rich domains with no similarity to other known growth factors. A single major 2-kilobase transcript was expressed in several embryonic tissues. Transfection of mammalian cells demonstrated that the protein was secreted and expressed as a doublet of approximately 35 kDa. In vitro translation and endoglycosylase analysis indicated that this doublet, which was also observed in cells expressing the endogenous protein, arises from posttranslational modification. A search of the GenBankTM data base revealed a match of Sk with Dkk-1, which is a novel secreted protein required for head induction in amphibian embryos and a potent Wnt inhibitor. When coexpressed with Wnt-2 in NIH3T3 cells, human Sk/Dkk-1 caused reversion of Wnt-2 induced morphological alterations and inhibited the Wnt-2 induced increase in uncomplexed beta-catenin levels. These results provide biochemical evidence that human Sk/Dkk-1 antagonizes Wnt signaling upstream of its effect on beta-catenin regulation.