The WNT/β-catenin signaling pathway is a prominent player in many developmental processes, including gastrulation, anterior-posterior axis specification, organ and tissue development, and homeostasis. Here, we use human pluripotent stem cells (hPSCs) to study the dynamics of the transcriptional response to exogenous activation of the WNT pathway. We describe a mechanism involving the WNT target gene SP5 that leads to termination of the transcriptional program initiated by WNT signaling. Integration of gene expression profiles of wild-type and SP5 mutant cells with genome-wide SP5 binding events reveals that SP5 acts to diminish expression of genes previously activated by the WNT pathway. Furthermore, we show that activation of SP5 by WNT signaling is most robust in cells with developmental potential, such as stem cells. These findings indicate a mechanism by which the developmental WNT signaling pathway reins in expression of transcriptional programs.