Heparan sulfate is a highly sulfated carbohydrate polymer that binds to and modulates the activities of numerous proteins. The formation of these protein-binding domains in heparan sulfate is dependent on a series of biosynthetic reactions that modify the polysaccharide backbone; the initiating and rate-limiting steps of this process are the N-deacetylation and N-sulfation of N-acetylglucosamine residues in the polymer. We now report that in the rat liver, biosynthesis of heparan sulfate utilizes a single protein that possesses both N-deacetylase and N-sulfotransferase activities. This was accomplished by demonstrating that both activities resided in a purified soluble fusion protein containing the Golgi-lumenal portion of the enzyme. We propose that this protein be renamed the rat liver Golgi heparan sulfate N-deacetylase/N-sulfotransferase.