Multiple signaling molecules, including bone morphogenic proteins (BMP) and fibroblast growth factors (FGF), play important roles in early lens development. However, how these morphogens are regulated is still largely unknown. Heparan sulfate participates in both morphogen transport and morphogen-receptor interaction. In this study, we demonstrate that inactivation of the heparan sulfate biosynthetic gene Ndst1 resulted in invagination defects of the early lens and in the disruption of lens-determination gene expression, leading to severe lens hypoplasia or anophthalmia. Ndst1 mutants exhibited reduced sulfation of heparan sulfate, but both BMP- and Wnt-signaling remained unchanged. Instead, these embryos showed diminished binding of a subset of FGF proteins to FGF receptors. Consistent with disruption of FGF signaling, expression of phospho-Erk and ERM were also downregulated in Ndst1-mutant lenses. Taken together, these results establish an important role of Ndst1 function in FGF signaling during lens development.