Poorly formed tumor blood vessels lead to regions of microenvironmental stress due to depletion of oxygen and glucose and accumulation of waste products (acidosis). These conditions contribute to tumor progression and correlate with poor patient prognosis. Here we show that the microenvironmental stresses found in the solid tumor are able to inhibit the canonical Wnt/beta-catenin signaling pathway. However, tumor cells harboring common beta-catenin pathway mutations, such as loss of adenomatous polyposis coli, are insensitive to this novel hypoxic effect. The underlying mechanism responsible is hypoxia-induced endoplasmic reticulum (ER) stress that inhibits normal Wnt protein processing and secretion. ER stress causes dissociation between GRP78/BiP and Wnt, an interaction essential for its correct posttranslational processing. Microenvironmental stress can therefore block autocrine and paracrine signaling of the Wnt/beta-catenin pathway and negatively affect tumor growth. This study provides a general paradigm relating oxygen status to ER function and growth factor signaling.