The balance between anabolic and catabolic signaling pathways is critical in maintaining cartilage homeostasis and its disturbance contributes to joint diseases such as osteoarthritis (OA). A unique mechanism that modulates the activity of cell signaling pathways is controlled by extracellular heparan endosulfatases Sulf-1 and Sulf-2 (Sulfs) that are overexpressed in OA cartilage. This study addressed the role of Sulfs in cartilage homeostasis and in regulating bone morphogenetic protein (BMP)/Smad and fibroblast growth factor (FGF)/Erk signaling in articular cartilage. Spontaneous cartilage degeneration and surgically induced OA were significantly more severe in Sulf-1(-/-) and Sulf-2(-/-) mice compared with wild-type mice. MMP-13, ADAMTS-5, and the BMP antagonist noggin were elevated whereas col2a1 and aggrecan were reduced in cartilage and chondrocytes from Sulf(-/-) mice. Articular cartilage and cultured chondrocytes from Sulf(-/-) mice showed reduced Smad1 protein expression and Smad1/5 phosphorylation, whereas Erk1/2 phosphorylation was increased. In human chondrocytes, Sulfs siRNA reduced Smad phosphorylation but enhanced FGF-2-induced Erk1/2 signaling. These findings suggest that Sulfs simultaneously enhance BMP but inhibit FGF signaling in chondrocytes and maintain cartilage homeostasis. Approaches to correct abnormal Sulf expression have the potential to protect against cartilage degradation and promote cartilage repair in OA.