Interactions between developmental signaling pathways govern the formation and function of stem cells. Prostaglandin (PG) E2 regulates vertebrate hematopoietic stem cells (HSC). Similarly, the Wnt signaling pathway controls HSC self-renewal and bone marrow repopulation. Here, we show that wnt reporter activity in zebrafish HSCs is responsive to PGE2 modulation, demonstrating a direct interaction in vivo. Inhibition of PGE2 synthesis blocked wnt-induced alterations in HSC formation. PGE2 modified the wnt signaling cascade at the level of beta-catenin degradation through cAMP/PKA-mediated stabilizing phosphorylation events. The PGE2/Wnt interaction regulated murine stem and progenitor populations in vitro in hematopoietic ES cell assays and in vivo following transplantation. The relationship between PGE2 and Wnt was also conserved during regeneration of other organ systems. Our work provides in vivo evidence that Wnt activation in stem cells requires PGE2, and suggests the PGE2/Wnt interaction is a master regulator of vertebrate regeneration and recovery.