Intestinal stem cell (ISC) self-renewal and proliferation are directed by Wnt/β-catenin signaling in mammals, whereas aberrant Wnt pathway activation in ISCs triggers the development of human colorectal carcinoma. Herein, we have utilized the Drosophila midgut, a powerful model for ISC regulation, to elucidate the mechanisms by which Wingless (Wg)/Wnt regulates intestinal homeostasis and development. We provide evidence that the Wg signaling pathway, activation of which peaks at each of the major compartment boundaries of the adult intestine, has essential functions. Wg pathway activation in the intestinal epithelium is required not only to specify cell fate near compartment boundaries during development, but also to control ISC proliferation within compartments during homeostasis. Further, in contrast with the previous focus on Wg pathway activation within ISCs, we demonstrate that the primary mechanism by which Wg signaling regulates ISC proliferation during homeostasis is non-autonomous. Activation of the Wg pathway in absorptive enterocytes is required to suppress JAK-STAT signaling in neighboring ISCs, and thereby their proliferation. We conclude that Wg signaling gradients have essential roles during homeostasis and development of the adult intestine, non-autonomously controlling stem cell proliferation inside compartments, and autonomously specifying cell fate near compartment boundaries.