The Wnt/frizzled cell signaling pathway has been implicated in the determination of polarity in a number of systems, including the Drosophila retina. The vertebrate retina develops from an undifferentiated neuroepithelium into an organized and laminated structure that demonstrates a high degree of polarity at both the tissue and cellular levels. In the process of searching for molecules that are preferentially expressed by the vertebrate retinal pigment epithelium (RPE), we identified secreted frizzled-related protein 5 (SFRP5), a member of the SFRP family that appears to act by modulating Wnt signal transduction. SFRP5 is highly expressed by RPE cells, and is also expressed in the pancreas. Within the retina, the related molecule SFRP2 is expressed specifically by cells of the inner nuclear layer. Thus, photoreceptors are likely to be bathed by two opposing gradients of SFRP molecules. Consistent with SFRP5 's postulated role in modulating Wnt signaling in the retina, it inhibits the ability of Xwnt-8 mRNA to induce axis duplication in Xenopus embryos. The human SFRP5 gene consists of three coding exons and it maps to chromosome 10q24.1; human SFRP2 maps to 4q31.3. Based on the biology and complementary expression patterns of SFRP2 and SFRP5, we suggest that they may be involved in determining the polarity of photoreceptor, and perhaps other, cells in the retina.