The HSulf-1 gene encodes an extracellular 6-O-endosulfatase and regulates the sulfation status of heparan sulfate proteoglycans (HSPG). We have demonstrated that promoter hypermethylation is correlated with the HSulf-1 silencing in gastric cancer. To investigate the functional importance of HSulf-1 silencing in gastric cancer, we restored HSulf-1 expression in the gastric cancer cell line MKN28, which lacks endogenous HSulf-1. Following restoration of expression, HSulf-1 inhibited cell proliferation, motility, and invasion in vitro, as well as significantly suppressing the MKN28 xenograft model (P < 0.05). No noticeable changes in proliferation and motility were observed following restoration of HSulf-1 in another gastric cancer cell line, namely AGS cells. Interestingly, in MKN28 cells, which have been reported to be dependent on extracellular Wnt signaling, we found that HSulf-1 inhibited the transcriptional activity of the Wnt ⁄ β-catenin pathway and downregulated its targeted genes. Conversely, in AGS cells, in the constitutive Wnt ⁄ β-catenin pathway is active, HSulf-1 had no effect on the activity of the Wnt ⁄ β-catenin pathway. Furthermore, transfection of Wnt3a cDNA or β-catenin shRNA resulted in rescue or enhancement, respectively, of the effects of HSulf-1 in MKN28 cells. Furthermore, HSPG epitope analysis confirmed that HSulf-1 affected the structure of heparan sulfate on the cell surface. Together, the results of the present study suggest that extracellular HSulf-1 may function as a negative regulator of proliferation and invasion in gastric cancer by suppressing Wnt ⁄ β-catenin signaling at the cell surface.