Cell surface heparan sulfate (HS) and chondroitin sulfate (CS) proteoglycans have been implicated in a multitude of biological processes, including embryonic implantation, tissue morphogenesis, wound repair, and neovascularization through their ability to regulate growth factor activity and morphogenic gradients. However, the direct role of the glycosaminoglycan (GAG) sugar-side chains in the control of human mesenchymal stem cell (hMSC) differentiation into the osteoblast lineage is poorly understood. Here, we show that the abundant cell surface GAGs, HS and CS, are secreted in proteoglycan complexes that directly regulate the bone morphogenetic protein (BMP)-mediated differentiation of hMSCs into osteoblasts. Enzymatic depletion of the HS and CS chains by heparinase and chondroitinase treatment decreased HS and CS expression but did not alter the expression of the HS core proteins perlecan and syndecan. When digested separately, depletion of HS and CS chains did not effect hMSC proliferation but rather increased BMP bioactivity through SMAD1/5/8 intracellular signaling at the same time as increasing canonical Wnt signaling through LEF1 activation. Long-term culturing of cells in HS- and CS-degrading enzymes also increased bone nodule formation, calcium accumulation, and the expression of such osteoblast markers as alkaline phosphatase, RUNX2, and osteocalcin. Thus, the enzymatic disruption of HS and CS chains on cell surface proteoglycans alters BMP and Wnt activity so as to enhance the lineage commitment and osteogenic differentiation of hMSCs.