We have carried out a small pool expression screen for modulators of the Wnt/beta-catenin pathway and identified Xenopus R-spondin2 (Rspo2) as a secreted activator of this cascade. Rspo2 is coexpressed with and positively regulated by Wnt signals and synergizes with Wnts to activate beta-catenin. Analyses of functional interaction with components of the Wnt/beta-catenin pathway suggest that Rspo2 functions extracellularly at the level of receptor ligand interaction. In addition to activating the Wnt/beta-catenin pathway, Rspo2 overexpression blocks Activin, Nodal, and BMP4 signaling in Xenopus, raising the possibility that it may negatively regulate the TGF-beta pathway. Antisense Morpholino experiments in Xenopus embryos and RNAi experiments in HeLa cells reveal that Rspo2 is required for Wnt/beta-catenin signaling. In Xenopus embryos depleted of Rspo2, the muscle markers myoD and myf5 fail to be activated and later muscle development is impaired. Thus, Rspo2 functions in a positive feedback loop to stimulate the Wnt/beta-catenin cascade.