The Wnt pathway has essential roles in cell proliferation, cell fate determination and tumorigenesis by regulating the expression of a wide range of target genes. As a core signaling cascade, the canonical Wnt pathway is regulated at different levels by numerous proteins. We have previously shown that carboxypeptidase E (CPE) is a novel regulator of the canonical Wnt signaling pathway. Here, we show that CPE and the Wnt3a ligand are co-secreted from cells. We show that although the C'-terminal Lys residue of Wnt3a is critical for its activity and is important for the effect of CPE on the Wnt pathway, CPE does not execute its effect by removing this Wnt3a residue. Interestingly, CPE through its N'-terminal sequence, forms aggregates with Wnt3a and possible endoplasmic reticulum (ER) stress leading to its loss of function. Together, our current results provide a mechanistic insight into the way CPE regulates the canonical Wnt signaling pathway.