Secreted frizzled-related proteins (sFRPs) are glycoproteins that are recognized as Wnt antagonists. To identify the functional domains that are involved in Wnt antagonist function, several sFRP-1 mutants and sFRP-1/sFRP-2 chimeras were generated. These mutants were characterized in an optimized T-cell factor (TCF)-luciferase based assay in U2OS human osteosarcoma cells. Deletions of the sFRP-1 cysteine rich domain (CRD) lead to the complete loss of Wnt antagonist function. A region between amino acids 73-86 within the second loop of the CRD of sFRP-1 was necessary for the optimal Wnt inhibitory function. Within this region, a conserved tyrosine residue played a critical role, and its change to neutral or polar amino acids lead to decreased Wnt inhibitory activity. The sFRP-1/sFRP-2 chimeras with the netrin domain of sFRP-1 replaced by corresponding sFRP-2 sequences showed 40-70% loss of Wnt antagonist function. The sFRP-1/sFRP-2 chimera with the replacement of C-terminal 19 amino acids of sFRP-1 with 11 amino acids of sFRP-2 resulted in 70% loss of activity indicating that carboxyl-terminal region of sFRP-1 is important for its Wnt inhibitory activity. The structure-function analysis studies of sFRP-1 clearly demonstrate the interaction of several functional domains for its optimal Wnt antagonist function.