Mutations in the diastrophic dysplasia sulfate transporter (DTDST) gene constitute a family of recessively inherited osteochondrodysplasias including achondrogenesis type 1B, atelosteogenesis type II, and diastrophic dysplasia. However, the functional properties of the gene product have yet to be elucidated. We cloned rat DTDST cDNA from rat UMR-106 osteoblastic cells. Northern blot analysis suggested that cartilage and intestine were the major expression sites for DTDST mRNA. Analysis of the genomic sequence revealed that the rat DTDST gene was composed of at least five exons. Two distinct transcripts were expressed in chondrocytes due to alternative utilization of the third exon, corresponding to an internal portion of the 5'-untranslated region of the cDNA. Injection of rat and human DTDST cRNA into Xenopus laevis oocytes induced Na+-independent sulfate transport. Transport activity of the expressed DTDST was markedly inhibited by extracellular chloride and bicarbonate. In contrast, canalicular Na+-independent sulfate transporter Sat-1 required the presence of extracellular chloride in the cRNA-injected oocytes. The activity profile of sulfate transport in growth plate chondrocytes was studied in the extracellular presence of various anions and found substantially identical to DTDST expressed in oocytes. Thus, sulfate transport of chondrocytes is dominantly dependent on the DTDST system. Finally, we demonstrate that undersulfation of proteoglycans by the chlorate treatment of chondrocytes significantly impaired growth response of the cells to fibroblast growth factor, suggesting a role for DTDST in endochondral bone formation.