The highly conserved Wnt family of growth factors is essential for generating embryonic pattern in many animal species [1]. In the fruit fly Drosophila, most Wnt-mediated patterning is performed by a single family member, Wingless (Wg), acting through its receptors Frizzled (Fz) and DFrizzled2 (Dfz2). In the ventral embryonic epidermis, Wg signaling generates two different cell-fate decisions: the production of diverse denticle types and the specification of naked cuticle separating the denticle belts. Mutant alleles of wg disrupt these cellular decisions separately [2], suggesting that some aspect of ligand-receptor affinity influences cell-fate decisions, or that different receptor complexes mediate the distinct cellular responses. Here, we report that overexpression of Dfz2, but not Fz, rescues the mutant phenotype of wgPE2, an allele that produces denticle diversity but no naked cuticle. Fz was able to substitute for Dfz2 only under conditions where the Wg ligand was present in excess. The wgPE2 mutant phenotype was also sensitive to the dosage of glycosaminoglycans, suggesting that the mutant ligand is excluded from the receptor complex when proteoglycans are present. We conclude that wild-type Wg signaling requires efficient interaction between ligand and the Dfz2-proteoglycan receptor complex to promote the naked cuticle cell fate.