Emerging data suggest that signaling by heparin-binding growth factors is influenced by the sulfation state of N-acetylglucosamine residues of heparan sulfate proteoglycans (HSPGs). Here we report that the recently identified protein HSulf-1, a heparin-degrading endosulfatase, encodes a cell surface-associated enzyme that diminishes sulfation of cell surface HSPGs. The message encoding this enzyme is readily detectable in a variety of normal tissues, including normal ovarian surface epithelial cells, but is undetectable in 5 of 7 ovarian carcinoma cell lines and markedly diminished or undetectable in approximately 75% of ovarian cancers. Similar down-regulation is also observed in breast, pancreatic, renal cells, and hepatocellular carcinoma lines. Re-expression of HSulf-1 in ovarian cancer cell lines resulted in diminished HSPG sulfation, diminished phosphorylation of receptor tyrosine kinases that require sulfated HSPGs as co-receptors for their cognate ligands, and diminished downstream signaling through the extracellular signal-regulated kinase pathway after treatment with fibroblast growth factor-2 or heparin-binding epidermal growth factor. Consistent with these changes, HSulf-1 re-expression resulted in reduced proliferation as well as sensitivity to induction of apoptosis by the broad spectrum kinase inhibitor staurosporine and the chemotherapeutic agent cisplatin. Collectively, these observations provide evidence that HSulf-1 modulates signaling by heparin-binding growth factors, and HSulf-1 down-regulation represents a novel mechanism by which cancer cells can enhance growth factor signaling.