Mammalian Wnt proteins are believed to act as short-range signals1,2,3,4, yet have not been previously visualizedin vivo. Self-renewal, proliferation and differentiation are coordinated along a putative Wnt gradient in the intestinal crypt5. Wnt3 is produced specifically by Paneth cells6,7. Here we have generated an epitope-tagged, functional Wnt3 knock-in allele. Wnt3 covers basolateral membranes of neighbouring stem cells. In intestinal organoids, Wnt3-transfer involves direct contact between Paneth cells and stem cells. Plasma membrane localization requires surface expression of Frizzled receptors, which in turn is regulated by the transmembrane E3 ligases Rnf43/Znrf3 and their antagonists Lgr4–5/R-spondin. By manipulating Wnt3 secretion and by arresting stem-cell proliferation, we demonstrate that Wnt3 mainly travels away from its source in a cell-bound manner through cell division, and not through diffusion. We conclude that stem-cell membranes constitute a reservoir for Wnt proteins, while Frizzled receptor turnover and ‘plasma membrane dilution’ through cell division shape the epithelial Wnt3 gradient.