Wnt-signalling plays a critical role in animal development, and its misregulation results in serious human diseases, including cancer. While the Wnt pathway is well studied in eumetazoan models, little is known about the evolutionary origin of its components and their functions. Here, we have identified key machinery of the Wnt-β-catenin (canonical)-signalling pathway that is encoded in the Amphimedon queenslandica (Demospongiae; Porifera) genome, namely Wnt, Fzd, SFRP, Lrp5/6, Dvl, Axin, APC, GSK3, β-catenin, Tcf, and Groucho. Most of these genes are not detected in the choanoflagellate and other nonmetazoan eukaryotic genomes. In contrast, orthologues of some of key components of bilaterian Wnt-planar cell polarity and Wnt/Ca(2+) are absent from the Amphimedon genome, suggesting these pathways evolved after demosponge and eumetazoan lineages diverged. Sequence analysis of the identified proteins of the Wnt-β-catenin pathway has revealed the presence of most of the conserved motifs and domains responsible for protein-protein and protein-DNA interactions in vertebrates and insects. However, several protein-protein interaction domains appear to be absent from the Amphimedon Axin and APC proteins. These are also missing from their orthologues in the cnidarian Nematostella vectensis, suggesting that they are bilaterian novelties. All of the analyzed Wnt pathway genes are expressed in specific patterns during Amphimedon embryogenesis. Most are expressed in especially striking and highly dynamic patterns during formation of a simple organ-like larval structure, the pigment ring. Overall, our results indicate that the Wnt-β-catenin pathway was used in embryonic patterning in the last common ancestor of living metazoans. Subsequently, gene duplications and a possible increase in complexity of protein interactions have resulted in the precisely regulated Wnt pathway observed in extant bilaterian animals.