Wg/Wnt as a signaling protein binds to Frizzled (Fz) and Arrow (Arr), two Wg co-receptors essential for Wg signaling for cell proliferation, differentiation, and cell survival. Arr has a long extracellular region, a single transmembrane domain and an intracellular region. Here, we report that a new arrm7 mutant is identified in a genetic screen as a suppressor of lethality induced by overexpression of Sol narae (Sona), a secreted metalloprotease in ADAMTS family involved in Wg signaling. arrm7 allele has a premature stop codon, which encodes Arrm7 protein missing the intracellular region. arrm7 clones show cell death phenotype and overexpression of Arrm7 protein also induces cell death. Levels of extracellular Sona were decreased in both arrm7 and arr2 null clones, demonstrating that Arr increases the level of extracellular Sona. Indeed, Arr but not Arrm7, increased levels of Sona in cytoplasm and exosome fraction by inhibiting the lysosomal degradation pathway. Interestingly, Arr itself was identified in the exosome fraction, demonstrating that Arr is secreted to extracellular space. When Sona-expressing S2 cells were treated with exosomal Arr, the extracellular level of active Sona was increased. These results show that exosomal Arr dictates Sona-expressing cells to increase the level of extracellular Sona. This new function of Arr occurred in the absence of Wg because S2 cells do not express Wg. We propose that Arr plays two distinct roles, one as an exosomal protein to increase the level of extracellular Sona in a Wnt-independent manner and the other as a Wg co-receptor in a Wnt-dependent manner.