The maternal-effect mutation ichabod (ich) results in ventralized zebrafish embryos due to impaired induction of the dorsal canonical Wnt-signaling pathway. While previous studies linked the phenotype to reduced ctnnb2 transcript levels, the causative mutation remained unidentified. Using long-read sequencing, we discovered that the ich phenotype stems from the insertion of a non-autonomous CMC-Enhancer/Suppressor-mutator (CMC-EnSpm) transposon in the 3'UTR of the gene. Through reporter assays, we demonstrate that while wild type ctnnb2 mRNAs exhibit remarkably high stability throughout the early stages of development, the insertion of the transposon dramatically reduces transcript stability. Genome-wide mapping of the CMC-EnSpm transposons across multiple zebrafish strains also indicated ongoing transposition activity in the zebrafish genome. Our findings not only resolve the molecular basis of the ich mutation but also highlight the continuing mutagenic potential of endogenous transposons and reveal unexpected aspects of maternal transcript regulation during early zebrafish development.