Heparan sulfate is a sulfated polysaccharide present on most cell surfaces and in the extracellular matrix. In vivo functions of heparan sulfate can be studied in mouse strains lacking enzymes involved in the biosynthesis of heparan sulfate. Glucosaminyl N-deacetylase/N-sulfotransferase (NDST) catalyzes the first modifying step in the biosynthesis of the polysaccharide. This bifunctional enzyme occurs in several isoforms. We here report that targeted gene disruption of NDST-1 in the mouse results in a structural alteration of heparan sulfate in most basement membranes as revealed by immunohistochemical staining of fetal tissue sections using antibodies raised against heparan sulfate. Biochemical analysis of heparan sulfate purified from fibroblast cultures, lung, and liver of NDST-1-deficient embryos demonstrated a dramatic reduction in N-sulfate content. Most NDST-1-deficient embryos survive until birth; however, they turn out to be cyanotic and die neonatally in a condition resembling respiratory distress syndrome. In addition, a minor proportion of NDST-1-deficient embryos die during the embryonic period. The cause of the embryonic lethality is still obscure, but incompletely penetrant defects of the skull and the eyes have been observed.