Secreted Wnt morphogens are essential for embryogenesis and homeostasis and require a lipid/palmitoleoylate modification for receptor binding and activity. Notum is a secreted Wnt antagonist that belongs to the α/β hydrolase superfamily, but its mechanism of action and roles in vertebrate embryogenesis are not fully understood. Here, we report that Notum hydrolyzes the Wnt palmitoleoylate adduct extracellularly, resulting in inactivated Wnt proteins that form oxidized oligomers incapable of receptor binding. Thus, Notum is a Wnt deacylase, and palmitoleoylation is obligatory for the Wnt structure that maintains its active monomeric conformation. Notum is expressed in naive ectoderm and neural plate in Xenopus and is required for neural and head induction. These findings suggest that Notum is a prerequisite for the "default" neural fate and that distinct mechanisms of Wnt inactivation by the Tiki protease in the Organizer and the Notum deacylase in presumptive neuroectoderm orchestrate vertebrate brain development.
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