During metazoan development, Wnt molecules are secreted from Wnt-producing cells, diffuse to target cells, and determine cell fates; therefore, Wnt secretion is tightly regulated. However, the molecular mechanisms controlling Wnt diffusion are not fully elucidated. The specific chondroitin sulfate (CS) structure synthesized by chondroitin-4-O-sulfotransferase-1 (C4ST-1) binds to Wnt-3a with high affinity (Nadanaka, S., Ishida, M., Ikegami, M., and Kitagawa, H. (2008) J. Biol. Chem. 283, 27333-27343). In this study we tested whether Wnt signaling regulates sulfation patterns of cell-associated CS chains by suppressing expression of C4ST-1 to trigger release of Wnt molecules from Wnt-producing cells. C4ST-1 expression was dramatically reduced in L cells that stably expressed Wnt-3a (L-Wnt-3a cells) and had CS with low affinity for Wnt-3a. Forced expression of C4ST-1 in L-Wnt-3a cells inhibited diffusion of Wnt-3a due to structural alterations in CS chains mediated by C4ST-1. Furthermore, sustained Wnt signaling negatively regulated C4ST-1 expression in a cell-autonomous and non-cell autonomous fashion. These results demonstrated that C4ST-1 is a key downstream target of Wnt signaling that regulates Wnt diffusion from Wnt-producing cells.