The Dkk family of secreted cysteine-rich proteins regulates Wnt/beta-catenin signaling by interacting with the Wnt co-receptor Lrp5/6. Here, we show that Dkk2-mediated repression of the Wnt/beta-catenin pathway is essential to promote differentiation of the corneal epithelial progenitor cells into a non-keratinizing stratified epithelium. Complete transformation of the corneal epithelium into a stratified epithelium that expresses epidermal-specific differentiation markers and develops appendages such as hair follicles is achieved in the absence of the Dkk2 gene function. We show that Dkk2 is a key regulator of the corneal versus epidermal fate of the ocular surface epithelium.