Epithelial planar cell polarity (PCP) is evident in the cellular organization of many tissues in vertebrates and invertebrates. In mammals, PCP signalling governs convergent extension during gastrulation and the organization of a wide variety of structures, including the orientation of body hair and sensory hair cells of the inner ear. In Drosophila melanogaster, PCP is manifest in adult tissues, including ommatidial arrangement in the compound eye and hair orientation in wing cells. PCP establishment requires the conserved Frizzled/Dishevelled PCP pathway. Mutations in PCP-pathway-associated genes cause aberrant orientation of body hair or inner-ear sensory cells in mice, or misorientation of ommatidia and wing hair in D. melanogaster. Here we provide mechanistic insight into Frizzled/Dishevelled signalling regulation. We show that the ankyrin-repeat protein Diego binds directly to Dishevelled and promotes Frizzled signalling. Dishevelled can also be bound by the Frizzled PCP antagonist Prickle. Strikingly, Diego and Prickle compete with one another for Dishevelled binding, thereby modulating Frizzled/Dishevelled activity and ensuring tight control over Frizzled PCP signalling.