WNTs comprise a family of secreted glycoproteins that are essential for normal embryonic development of the female reproductive system. The functional role that WNTs play in the postnatal ovary is poorly defined. We have shown previously that Wnt2 and Fzd4 mRNAs are expressed in granulosa cells of the postnatal rat ovary. Here we examine the effects of Wnt2 overexpression in a rat granulosa cell line (DC3) that displays characteristics of granulosa cells at an early stage of follicular development. We show that DC3 cells express a 7.7-kb Fzd4 mRNA transcript similar in size to that detected in the rat and human ovary. Our results demonstrate that Wnt2 overexpression in DC3 promotes cytosolic and nuclear accumulation of beta-catenin (CTNNB1), but does not stimulate CTNNB1/TCF-dependent (pGL3-OT) transcriptional activity. We show that chibby (CBY1), a nuclear CTNNB1-associated antagonist of the WNT pathway, is expressed in DC3 cells and associates with CTNNB1 in the presence and absence of Wnt2 overexpression, suggesting that Cby1 contributes to suppression of CTNNB1/TCF-dependent transcription in these cells. Our results show that Wnt2 overexpression in DC3 cells increases follistatin (Fst) mRNA expression and promotes resistance to activin-induced cell deletion. Taken together, our results suggest that WNT2 opposes activin activity in granulosa cells by up-regulating expression of the activin antagonist Fst in a CTNNB1/TCF-independent manner, and that rat granulosa cells express factors, including Cby1, that suppress CTNNB1/TCF-dependent signal transduction in the presence of a WNT signal.