β-Catenin functions as a transducer of Wnt signals to the nucleus, where it interacts with the T cell factor (TCF) family of DNA binding proteins to regulate gene expression. On the basis of the genes regulated by β-catenin and TCF in various biologic settings, two predicted functions of β-catenin/TCF-dependent transcription are to mediate the loss of epithelial polarity and to promote fibroblast activities, such as the increased synthesis of fibronectin during chronic renal disease. These predictions were tested by determination of the expression and function of an inhibitor of Wnt signaling, secreted frizzled-related protein 4 (sFRP4), during renal tubular epithelial injury initiated by unilateral ureteral obstruction (UUO). Despite increased sFRP4 gene expression in perivascular regions of injured kidneys, total sFRP4 protein levels decreased after injury. The decreased sFRP4 protein levels after UUO accompanied increased Wnt-dependent β-catenin signaling in tubular epithelial and interstitial cells, along with increased expression of markers of fibrosis. Administration of recombinant sFRP4 protein caused a reduction in tubular epithelial β-catenin signaling and suppressed the progression of renal fibrosis, as evidenced by a partial maintenance of E-cadherin mRNA expression and a reduction in the amount of fibronectin and α-smooth muscle actin proteins. Furthermore, recombinant sFRP4 reduced the number of myofibroblasts, a central mediator of fibrosis. It is concluded that β-catenin signaling is activated in tubular epithelial and interstitial cells after renal injury, and recombinant sFRP4 can interfere with epithelial de-differentiation and with fibroblast differentiation and function during progression of renal fibrosis.