By using the differential display technique to identify genes that are differentially expressed in human endometrial carcinoma compared with normal endometrium, we have cloned frpHE, a novel member of the secreted frizzled gene family. By in situ hybridization, we have determined that frpHE is expressed by mesenchymal cells but not by epithelial cells. The expression of frpHE is modulated during the endometrial cycle: it is expressed in the stroma of proliferative endometrium and not significantly detectable in secretory or menstrual endometrium, suggesting that frpHE is under hormonal regulation. In addition, the expression of frpHE mRNA is markedly up-regulated in the stroma of endometrial hyperplasia and carcinoma and in the stroma of in situ and infiltrating breast carcinomas. Injection of frpHE mRNA in Xenopus embryos inhibited the Wnt-8 mediated dorsal axis duplication. These results indicate that frpHE functions as a regulator of the Wnt-frizzled signaling pathway and is involved in endometrial physiology and carcinogenesis.