The interactions of heparan sulfate (HS) with heparin-binding growth factors, such as fibroblast growth factors (FGFs), depend greatly on the chain structures. O-Sulfations at various positions on the chain are major factors determining HS structure; therefore, O-sulfation patterns may play a crucial role in controlling the developmental and morphogenetic processes of various tissues and organs by spatiotemporally regulating the activities of heparin-binding growth factors. In a previous study, we found that HS-2-O-sulfotransferase is strongly expressed throughout the mesoderm of chick limb buds during the early stages of development. Here we show that inhibition of HS-2-O-sulfotransferase in the prospective limb region by small inhibitory RNA resulted in the truncation of limb buds and reduced Fgf-8 expression in the apical ectodermal ridge. The treatment also reduced Fgf-10 expression in the mesenchyme. Moreover 2-O-sulfated HS, normally abundant in the basement membranes and mesoderm under ectoderm in limb buds, was significantly reduced in the treated buds. Phosphorylation levels of ERK and Akt were up-regulated in such truncated buds. Thus, we have shown for the first time that 2-O-sulfation of HS is essential for the FGF signaling required for limb bud development and outgrowth.