Acts as a coreceptor with members of the frizzled family of seven-transmembrane spanning receptors to transduce signal by Wnt proteins. Activates the canonical Wnt signaling pathway that controls cell fate determination and self-renewal during embryonic development and adult tissue regeneration. In particular, may play an important role in the development of the posterior patterning of the epiblast during gastrulation (By similarity). During bone development, regulates osteoblast proliferation and differentiation thus determining bone mass. Mechanistically, the formation of the signaling complex between Wnt ligand, frizzled receptor and LRP5 coreceptor promotes the recruitment of AXIN1 to LRP5, stabilizing beta-catenin/CTNNB1 and activating TCF/LEF-mediated transcriptional programs. Acts as a coreceptor for non-Wnt proteins, such as norrin/NDP. Binding of norrin/NDP to frizzled 4/FZD4-LRP5 receptor complex triggers beta-catenin/CTNNB1-dependent signaling known to be required for retinal vascular development. Plays a role in controlling postnatal vascular regression in retina via macrophage-induced endothelial cell apoptosis (By similarity).