WNT1-inducible-signaling pathway protein 2 (WISP2) is primarily expressed in mesenchymal stem cells, fibroblasts, and adipogenic precursor cells. It is both a secreted and cytosolic protein, the latter regulating precursor cell adipogenic commitment and PPARγ induction by BMP4. To examine the effect of the secreted protein, we expressed a full-length and a truncated, non-secreted WISP2 in NIH3T3 fibroblasts. Secreted, but not truncated WISP2 activated the canonical WNT pathway with increased β-catenin levels, its nuclear targeting phosphorylation, and LRP5/6 phosphorylation. It also inhibited Pparg activation and the effect of secreted WISP2 was reversed by the WNT antagonist DICKKOPF-1. Differentiated 3T3-L1 adipose cells were also target cells where extracellular WISP2 activated the canonical WNT pathway, inhibited Pparg and associated adipose genes and, similar to WNT3a, promoted partial dedifferentiation of the cells and the induction of a myofibroblast phenotype with activation of markers of fibrosis. Thus, WISP2 exerts dual actions in mesenchymal precursor cells; secreted WISP2 activates canonical WNT and maintains the cells in an undifferentiated state, whereas cytosolic WISP2 regulates adipogenic commitment.