Wingless (Wg) signaling regulates expression of its target genes via Pangolin and Armadillo, and their interacting cofactors. In the absence of Wg, Pangolin mediates transcriptional repression. In the presence of Wg, Pangolin, Armadillo, and a cohort of coactivators mediate transcriptional activation. Here we uncover Coop (corepressor of Pan) as a Pangolin-interacting protein. Coop and Pangolin form a complex on DNA containing a Pangolin/TCF-binding motif. Overexpression of Coop specifically represses Wg target genes, while loss of Coop function causes derepression. Finally, we show that Coop antagonizes the binding of Armadillo to Pangolin, providing a mechanism for Coop-mediated repression of Wg target gene transcription.