O-GlcNAcylation functions as a cellular nutrient and stress sensor and participates in almost all cellular processes. However, it remains unclear whether O-GlcNAcylation plays a role in the establishment and maintenance of cell polarity, because mice lacking O-GlcNAc transferase (OGT) are embryonically lethal. Here, a mild Ogt knockout mouse model is constructed and the important role of O-GlcNAcylation in establishing and maintaining cell polarity is demonstrated. Ogt knockout leads to severe pulmonary fibrosis and dramatically promotes epithelial-to-mesenchymal transition. Mechanistic studies reveal that OGT interacts with pericentriolar material 1 (PCM1) and centrosomal protein 131 (CEP131), components of centriolar satellites required for anchoring microtubules to the centrosome. These data further show that O-GlcNAcylation of PCM1 and CEP131 promotes their centrosomal localization through phase separation. Decrease in O-GlcNAcylation prevents PCM1 and CEP131 from localizing to the centrosome, instead dispersing these proteins throughout the cell and impairing the microtubule-centrosome interaction to disrupt centrosome positioning and cell polarity. These findings identify a previously unrecognized role for protein O-GlcNAcylation in establishing and maintaining cell polarity with important implications for the pathogenesis of pulmonary fibrosis.