The developmental signaling functions of cell surface heparan sulfate proteoglycans (HSPGs) are dependent on their sulfation states. Here, we report the identification of QSulf1, the avian ortholog of an evolutionarily conserved protein family related to heparan-specificN-acetyl glucosamine sulfatases. QSulf1 expression is induced by Sonic hedgehog in myogenic somite progenitors in quail embryos and is required for the activation of MyoD, a Wnt-induced regulator of muscle specification. QSulf1 is localized on the cell surface and regulates heparan-dependent Wnt signaling in C2C12 myogenic progenitor cells through a mechanism that requires its catalytic activity, providing evidence that QSulf1 regulates Wnt signaling through desulfation of cell surface HSPGs.