Wnt signaling stabilizes beta-catenin through the LRP6 receptor signaling complex, which antagonizes the beta-catenin destruction complex. The Axin scaffold and associated glycogen synthase kinase-3 (GSK3) have central roles in both assemblies, but the transduction mechanism from the receptor to the destruction complex is contentious. We report that Wnt signaling is governed by phosphorylation regulation of the Axin scaffolding function. Phosphorylation by GSK3 kept Axin activated ("open") for beta-catenin interaction and poised for engagement of LRP6. Formation of the Wnt-induced LRP6-Axin signaling complex promoted Axin dephosphorylation by protein phosphatase-1 and inactivated ("closed") Axin through an intramolecular interaction. Inactivation of Axin diminished its association with beta-catenin and LRP6, thereby inhibiting beta-catenin phosphorylation and enabling activated LRP6 to selectively recruit active Axin for inactivation reiteratively. Our findings reveal mechanisms for scaffold regulation and morphogen signaling.