Wnt/ß-catenin signalling is crucial for maintaining the balance between cell proliferation and differentiation, both during tissue morphogenesis and in tissue maintenance throughout postnatal life. Whereas the signalling activities of the core Wnt/ß-catenin pathway components are understood in great detail, far less is known about the precise role and regulation of the many different modulators of Wnt/ß-catenin signalling that have been identified to date. Here we describe TMEM98, a putative transmembrane protein of unknown function, as an interaction partner and regulator of the GSK3-binding protein FRAT2. We show that TMEM98 reduces FRAT2 protein levels and, accordingly, inhibits the FRAT2-mediated induction of ß-catenin/TCF signalling. We also characterize the intracellular trafficking of TMEM98 in more detail and show that it is recycled between the plasma membrane and the Golgi. Together, our findings not only reveal a new layer of regulation for Wnt/ß-catenin signalling, but also a new biological activity for TMEM98.