Sulfation of macromolecules requires the translocation of a high energy form of nucleotide sulfate, i.e. 3-phosphoadenosine 5-phosphosulfate (PAPS), from the cytosol into the Golgi apparatus. In this study, we identified a novel Drosophila PAPS transporter gene dPAPST2 by conducting data base searches and screening the PAPS transport activity among the putative nucleotide sugar transporter genes in Drosophila. The amino acid sequence of dPAPST2 showed 50.5 and 21.5% homology to the human PAPST2 and SLALOM, respectively. The heterologous expression of dPAPST2 in yeast revealed that the dPAPST2 protein is a PAPS transporter with an apparent K m value of 2.3 M. The RNA interference of dPAPST2 in cell line and flies showed that the dPAPST2 gene is essential for the sulfation of cellular proteins and the viability of the fly. In RNA interference flies, an analysis of the genetic interaction between dPAPST2 and genes that contribute to glycosaminoglycan synthesis suggested that dPAPST2 is involved in the glycosaminoglycan synthesis and the subsequent signaling. The dPAPST2 and sll genes showed a similar ubiquitous distribution. These results indicate that dPAPST2 may be involved in Hedgehog and Decapentaplegic signaling by controlling the sulfation of heparan sulfate.Sulfation of proteins, proteoglycans, and lipids is involved in a variety of biological phenomena. It requires certain processes that provide a donor substrate for sulfotransferases. First, the free sulfate incorporated into the cell must be converted into a high energy form of nucleotide sulfate, namely 3Ј-phosphoadenosine 5Ј-phosphosulfate (PAPS), 3 by PAPS synthases. Next, the PAPS must be translocated from the cytosol into the Golgi apparatus by PAPS transporters. These components that are involved in the PAPS providing pathways also play a crucial role in controlling the sulfation process; however, the sulfotransferases have long been believed to be the rate-limiting components (1). A recent analysis of Drosophila mutants with defects in the sulfation pathway revealed the significance of heparan sulfate (HS) sulfation on growth factor signaling during development (for reviews see Refs. 1-3). A mutation in a gene encoding Drosophila N-deacetylase/N-sulfotransferase (sulfateless, sfl ) causes defects in Wingless (4) and fibroblast growth factor signaling (5). Recently, we identified the PAPS transporter genes, human PAPST1 and the Drosophila ortholog slalom (sll) (6). Lüders et al. (7) demonstrated that sll is involved in growth factor signaling pathways during patterning and morphogenesis similar to sfl. The cell surface HS is involved in a variety of developmental signaling pathways, and the functions of HS are known to depend on its sulfation state (8, 9). A mutation in the sll gene resulted in defects in multiple signaling pathways, including those of Wingless and Hedgehog signaling (7). The sll gene is also required for the determination of the embryonic dorsal/ventral axis, possibly for the activation of the signaling cascade that is initiated by...