Heparan sulfate proteoglycans (HSPGs) act as coreceptors or storage sites for growth factors and cytokines such as fibroblast growth factor and Wnts. Glypican 3 (GPC3) is the most highly expressed HSPG in hepatocellular carcinoma (HCC). Sulfatase 2 (SULF2), an enzyme with 6-O-desulfatase activity on HSPGs, is up-regulated in 60% of primary HCCs and is associated with a worse prognosis. We have previously shown that the oncogenic effect of SULF2 in HCC may be mediated in part through up-regulation of GPC3. Here we demonstrate that GPC3 stimulates the Wnt/β-catenin pathway and mediates the oncogenic function of SULF2 in HCC. Wnt signaling in vitro and in vivo was assessed in SULF2-negative Hep3B HCC cells transfected with SULF2 and in SULF2-expressing Huh7 cells transfected with short hairpin RNA targeting SULF2. The interaction between GPC3, SULF2, and Wnt3a was assessed by coimmunoprecipitation and flow cytometry. β-catenin–dependent transcriptional activity was assessed with the TOPFLASH (T cell factor reporter plasmid) luciferase assay. In HCC cells, SULF2 increased cell surface GPC3 and Wnt3a expression, stabilized β-catenin, and activated T cell factor transcription factor activity and expression of the Wnt/β-catenin target gene cyclin D1. Opposite effects were observed in SULF2-knockdown models. In vivo, nude mouse xenografts established from SULF2-transfected Hep3B cells showed enhanced GPC3, Wnt3a, and β-catenin levels. Conclusion: Together, these findings identify a novel mechanism mediating the oncogenic function of SULF2 in HCC that includes GPC3-mediated activation of Wnt signaling via the Wnt3a/glycogen synthase kinase 3 beta axis. (HEPATOLOGY 2010;)