Gene signatures derived from cancer stem cells (CSCs) predict tumor recurrence for many forms of cancer. Here, we derived a gene signature for colorectal CSCs defined by high Wnt signaling activity, which in agreement with previous observations predicts poor prognosis. Surprisingly, however, we found that elevated expression of Wnt targets was actually associated with good prognosis, while patient tumors with low expression of Wnt target genes segregated with immature stem cell signatures. We discovered that several Wnt target genes, including ASCL2 and LGR5, become silenced by CpG island methylation during progression of tumorigenesis, and that their re-expression was associated with reduced tumor growth. Taken together, our data show that promoter methylation of Wnt target genes is a strong predictor for recurrence of colorectal cancer, and suggest that CSC gene signatures, rather than reflecting CSC numbers, may reflect differentiation status of the malignant tissue.