Wnt ligand-driven tumor growth is inhibited by the soluble Wnt inhibitor Fzd8CRD, but the mechanism through which this effect is mediated is unknown. In the MMTV-Wnt1 mouse model, regression of mammary tumors by Fzd8CRD treatment coincides with an acute and strong induction of insulin-like growth factor (IGF)-binding protein IGFBP5, an antagonist of IGF signaling that mediates involution of mammary gland in females after offspring are weaned. In this study, we show that repression of this IGF inhibitory pathway is crucial for Wnt-driven growth of mammary tumors. We found that IGFBP5 regulation was mediated by the β-catenin-dependent Wnt pathway. Wnt, in addition to IGF ligands, facilitated tumor growth by paracrine communication among tumor cells. In addition, Fzd8CRD caused precocious induction of IGFBP5 in normal mammary glands undergoing involution, implying an acceleration of the involution process by inhibition of Wnt signaling. The molecular and phenotypic parallel between tumor regression and mammary gland involution suggests that Wnt-driven mammary tumors use the same growth mechanism as proliferating normal mammary glands.