The Wnt/Wingless (Wg) pathway represents a conserved signaling cascade involved in diverse biological processes. Misregulation of Wnt/Wg signal transduction has profound effects on development. Homeodomain-interacting protein kinases (Hipks) represent a novel family of serine/threonine kinases. Members of this group (in particular Hipk2) are implicated as important factors in transcriptional regulation to control cell growth, apoptosis and development. Here, we provide genetic and phenotypic evidence that the sole Drosophila member of this family, Hipk, functions as a positive regulator in the Wg pathway. Expression of hipk in the wing rescues loss of the Wg signal, whereas loss of hipk can enhance decreased wg signaling phenotypes. Furthermore, loss of hipk leads to diminished Arm protein levels, whereas overexpression of hipk promotes the Wg signal by stabilizing Arm, resulting in activation of Wg responsive targets. In Wg transcriptional assays, Hipk enhanced Tcf/Arm-mediated gene expression in a kinase-dependent manner. In addition, Hipk can bind to Arm and Drosophila Tcf, and phosphorylate Arm. Using both in vitro and in vivo assays, Hipk was found to promote the stabilization of Arm. We observe similar molecular interactions between Lef1/beta-catenin and vertebrate Hipk2, suggesting a direct and conserved role for Hipk proteins in promoting Wnt signaling.