Tail formation in vertebrates involves the specification of a population of multipotent precursors, the tailbud, which will give rise to all of the posterior structures of the embryo. Wnts are signaling proteins that are candidates for promoting tail outgrowth in zebrafish, although which Wnts are involved, what genes they regulate, and whether Wnts are required for initiation or maintenance steps in tail formation has not been resolved. We show here that both wnt3a and wnt8 are expressed in the zebrafish tailbud and that simultaneous inhibition of both wnt3a and wnt8 using morpholino oligonucleotides can completely block tail formation. In embryos injected with wnt3a and wnt8 morpholinos, expression of genes in undifferentiated presomitic mesoderm is initiated, but not maintained. To identify genes that might function downstream of Wnts in tail formation, a DNA microarray screen was conducted, revealing that sp5l, a member of the Sp1 family of zinc-finger transcription factors, is activated by Wnt signaling. Moreover, we show that sp5l expression in the developing tail is dependent on both wnt3a and wnt8 function. Supporting a role for sp5l in tail formation, we find that inhibition of sp5l strongly enhances the effects of wnt3a inhibition, and overexpression of sp5l RNA is able to completely restore normal tail development in wnt3a morphants. These data place sp5l downstream of wnt3a and wnt8 in a Wnt/beta-catenin signaling pathway that controls tail development in zebrafish.