Canonical Wnt signaling is initiated by binding of Wnt proteins to members of the Frizzled family and subsequent complex formation with lipoprotein receptor-related proteins 5/6 (LRP5/6). Here, we show that LRP6 is palmitoylated on a juxtamembranous cysteine and that palmitoylation is required for exit from the endoplasmic reticulum (ER). We propose that palmitoylation serves to tilt the long, 23-residue transmembrane domain of LRP6 with respect to the plane of membrane to prevent a hydrophobic mismatch and subsequent recognition by the ER quality control. In support of this model, a palmitoylation-deficient LRP6 mutant could be rescued from ER retention by deletion of two to four residues in the transmembrane domain. Importantly, we found that palmitoylation-deficient LRP6 was retained in the ER by a completely novel monoubiquitination-dependent ER retention mechanism. Mutation of a specific lysine indeed abolished ubiquitination of palmitoylation-deficient LRP6 and led to a rescue from ER retention. Finally, at the cell surface, we found that interplay between palmitoylation and ubiquitination was necessary for efficient Wnt signaling.