Heparan sulfate proteoglycans function in development and disease. They consist of a core protein with attached heparan sulfate chains that are altered by a series of carbohydrate-modifying enzymes and sulfotransferases. Here, we report on the identification and characterization of a gene encoding zebrafish heparan sulfate 6-O-sulfotransferase (hs6st) that shows high homology to other heparan sulfate 6-O-sulfotransferases. When expressed as a fusion protein in cultured cells, the protein shows specific 6-O-sulfotransferase activity and preferentially acts on the iduronosyl N-sulfoglycosamine. In the developing embryo, hs6st is expressed in the brain, the somites, and the fins; the same structures that were affected upon morpholino-mediated functional knockdown. Morpholino injections significantly inhibited 6-O- but not 2-O-sulfation as assessed by HPLC. Morphants display disturbed somite specification independent of the somite oscillator mechanism and have impaired muscle differentiation. In conclusion, our results show that transfer of sulfate to specific positions on glycosaminoglycans is essential for muscle development.