Heparan sulfate acetyl-CoA:α-glucosaminide N-acetyltransferase (HGSNAT) catalyzes the transmembrane acetylation of heparan sulfate in lysosomes required for its further catabolism. Inherited deficiency of HGSNAT in humans results in lysosomal storage of heparan sulfate and causes severe neurodegenerative disease, mucopolysaccharidosis III type C (MPS IIIC). MPS IIIC patients can potentially benefit from a therapeutic approach based on active site-specific inhibitors of HGSNAT used as pharmacological chaperons to modify the folding of the mutant protein in the patient's cells. This research however was hampered by the absence of the assay suitable for high-throughput screening of drug libraries for HGSNAT inhibitors. The existing method utilizing 4-methylumbelliferyl-β-D-glucosaminide (MU-βGlcN) requires the sequential action of two enzymes, HGSNAT and β-hexosaminidase, whereas the radioactive assay with [C14]-AcCoA is complicated and expensive. We describe a novel direct method to assay HGSNAT enzymatic activity using fluorescent BODIPY-glucosamine as a substrate. The specificity of the assay was tested using cultured fibroblasts of MPS IIIC patients, which showed a profound deficiency of HGSNAT activity as compared to normal controls as well as to MPS IIIA and D patients known to have normal HGSNAT activity. Known competitive HGSNAT inhibitor, glucosamine, had similar inhibition constants for MU-βGlcN and BODIPY-glucosamine acetylation reactions. Altogether our data show that novel HGSNAT assay is specific and potentially applicable for the biochemical diagnosis of MPS IIIC and high-throughput screening for HGSNAT inhibitors.