Glycosaminoglycans (GAGs) such as heparan sulfate and chondroitin sulfate are polysaccharide chains that are attached to core proteins to form proteoglycans. The biosynthesis of GAGs is a multistep process that includes the attachment of sulfate groups to specific positions of the polysaccharide chains by sulfotransferases. Heparan-sulfate and heparan sulfate-sulfotransferases play important roles in growth factor signaling and animal development. However, the biological importance of chondroitin sulfation during mammalian development and growth factor signaling is poorly understood. We show that a gene trap mutation in the BMP-induced chondroitin-4-sulfotransferase 1 (C4st1) gene (also called carbohydrate sulfotransferase 11 - Chst11), which encodes an enzyme specific for the transfer of sulfate groups to the 4-O-position in chondroitin, causes severe chondrodysplasia characterized by a disorganized cartilage growth plate as well as specific alterations in the orientation of chondrocyte columns. This phenotype is associated with a chondroitin sulfation imbalance, mislocalization of chondroitin sulfate in the growth plate and an imbalance of apoptotic signals. Analysis of several growth factor signaling pathways that are important in cartilage growth plate development showed that the C4st1(gt/gt) mutation led to strong upregulation of TGFbeta signaling with concomitant downregulation of BMP signaling, while Indian hedgehog (Ihh) signaling was unaffected. These results show that chondroitin 4-O-sulfation by C4st1 is required for proper chondroitin sulfate localization, modulation of distinct signaling pathways and cartilage growth plate morphogenesis. Our study demonstrates an important biological role of differential chondroitin sulfation in mammalian development.