Wnt/β-catenin signaling is regulated in a bimodal fashion during cardiogenesis. Signaling is initially required to promote generation of precardiac mesoderm, but subsequently must be repressed for cardiac progenitor specification. TMEM88 was discovered recently as a negative regulator during the later phase of cardiac progenitor specification, but how TMEM88 functions was unknown. Based on a C-terminal PDZ-binding motif, TMEM88 was proposed to act by targeting the PDZ domain of Dishevelled, the positive Wnt signaling mediator. However, we discovered that TMEM88 acts downstream of the β-catenin destruction complex and can inhibit Wnt signaling independent of Dishevelled. TMEM88 requires the PDZ-binding motif for trafficking from Golgi to the plasma membrane and is also found in the multivesicular body (MVB) associated with the endocytosed Wnt signalosome. Expression of Tmem88 promotes association of the Wnt signalosome including β-catenin to the MVB, leading to reduced accumulation of nuclear β-catenin and repression of Wnt signaling.