SignificanceAdenomatosis polyposis coli down-regulated 1 (APCDD1)—a conserved single-span transmembrane protein containing a large extracellular domain—negatively regulates WNT signaling and plays important roles in hair follicle development, CNS vascular development, and glial differentiation. We report here the three-dimensional structure of the ECD of APCDD1, revealing an unusual architecture. The APCDD1 ECD consists of two closely apposed β-barrel domains (ABD1 and ABD2). ABD2 contains a large hydrophobic pocket that accommodates a bound lipid. In an in vitro assay, the ECD of APCDD1 bound to WNT7A, which contains a covalently linked palmitoleate. Collectively, the results of this study suggest that APCDD1 serves as a negative feedback regulator of WNT signaling by neutralizing WNT ligands.