Here we report the cloning of a full-length cDNA encoding the human ortholog (HSulf-1) of the developmentally regulated putative sulfatases QSulf-1 (Dhoot, G. K., Gustafsson, M. K., Ai, X., Sun, W., Standiford, D. M., and Emerson, C. P., Jr. (2001) Science 293, 1663-1666) and RSulfFP1 (Ohto, T., Uchida, H., Yamazaki, H., Keino-Masu, K., Matsui, A., and Masu, M. (2002) Genes Cells 7, 173-185) as well as a cDNA encoding a closely related protein, designated HSulf-2. We have also obtained cDNAs for the mouse orthologs of both Sulfs. We demonstrate that the proteins encoded by both classes of cDNAs are endoproteolytically processed in the secretory pathway and are released into conditioned medium of transfected CHO cells. We demonstrate that the mammalian Sulfs exhibit arylsulfatase activity with a pH optimum in the neutral range; moreover, they can remove sulfate from the C-6 position of glucosamine within specific subregions of intact heparin. Taken together, our results establish that the mammalian Sulfs are extracellular endosulfatases with strong potential for modulating the interactions of heparan sulfate proteoglycans in the extracellular microenvironment.