sqv (squashed vulva) genes comprise a set of eight independent loci in Caenorhabditis elegans required zygotically for the invagination of vulval epithelial cells and maternally for normal oocyte formation and embryogenesis. Sequencing of sqv-3, sqv-7, and sqv-8 suggested a role for the encoded proteins in glycolipid or glycoprotein biosynthesis. Using a combination of in vitro analysis of SQV enzymatic activities, sqv(+)-mediated rescue of vertebrate cell lines, and biochemical characterization of sqv mutants, we show that sqv-3, -7, and -8 all affect the biosynthesis of glycosaminoglycans and therefore compromise the function of one specific class of glycoconjugates, proteoglycans. These findings establish the importance of proteoglycans and their associated glycosaminoglycans in epithelial morphogenesis and patterning during C. elegans development.