The Wnt-Wingless (Wg) pathway regulates development through precisely controlled signaling. In this study, we show that intracellular trafficking regulates Wg signaling levels. In Drosophila melanogaster cells stimulated with Wg media, dynamin or Rab5 knockdown causes reduced Super8XTOPflash activity, suggesting that internalization and endosomal transport facilitate Wg signaling. In the wing, impaired dynamin function reduces Wg transcription. However, when Wg production is unaffected, extracellular Wg levels are increased. Despite this, target gene expression is reduced, indicating that internalization is also required for efficient Wg signaling in vivo. When endosomal transport is impaired, Wg signaling is similarly reduced. Conversely, the expression of Wg targets is enhanced by increased transport to endosomes or decreased hepatocyte growth factor-regulated tyrosine kinase substrate- mediated transport from endosomes. This increased signaling correlates with greater colocalized Wg, Arrow, and Dishevelled on endosomes. As these data indicate that endosomal transport promotes Wg signaling, our findings suggest that the regulation of endocytosis is a novel mechanism through which Wg signaling levels are determined.