In the Wnt-β-catenin pathway, Wnt binding to Frizzled (Fzd) and LRP5 or LRP6 (LRP5/6) co-receptors inhibits the degradation of the transcriptional coactivator β-catenin by recruiting the cytosolic effector Dishevelled (Dvl). Polymerization of Dvl at the plasma membrane recruits the β-catenin destruction complex, enabling the phosphorylation of LRP5/6, a key step in inhibiting β-catenin degradation. Using purified Fzd proteins reconstituted in lipid nanodiscs, we investigated the factors that promote the recruitment of Dvl to the plasma membrane. We found that the affinity of Fzd for Dvl was not affected by Wnt ligands, in contrast to other members of the GPCR superfamily for which the binding of extracellular ligands affects the affinity for downstream transducers. Instead, Fzd-Dvl binding was enhanced by increased concentration of the lipid PI(4,5)P2, which is generated by Dvl-associated lipid kinases in response to Wnt and which is required for LRP5/6 phosphorylation. Moreover, binding to Fzd did not promote Dvl DEP domain dimerization, which has been proposed to be required for signaling downstream of Fzd. Our findings suggest a positive feedback loop in which Wnt-stimulated local PI(4,5)P2 production enhances Dvl recruitment and further PI(4,5)P2 production to support Dvl polymerization, LRP5/6 phosphorylation, and β-catenin stabilization.