Decorin is a small leucine-rich proteoglycan harboring a single glycosaminoglycan chain, which, in skin, is mainly composed of dermatan sulfate (DS). Mutant mice with targeted disruption of the decorin gene (Dcn(-/-)) exhibit an abnormal collagen architecture in the dermis and reduced tensile strength, collectively leading to a skin fragility phenotype. Notably, Ehlers-Danlos patients with mutations in enzymes involved in the biosynthesis of DS display a similar phenotype, and recent studies indicate that DS is involved in growth factor binding and signaling. To determine the impact of the loss of DS-decorin in the dermis, we analyzed the glycosaminoglycan content of Dcn(-/-) and wild-type mouse skin. The total amount of chondroitin/dermatan sulfate (CS/DS) was increased in the Dcn(-/-) skin, but was overall less sulfated with a significant reduction in bisulfated ΔDiS2,X (X=4 or 6) disaccharide units, due to the reduced expression of uronyl 2-O sulfotransferase (Ust). With increasing age, sulfation declined; however, Dcn(-/-) CS/DS was constantly undersulfated vis-à-vis wild-type. Functionally, we found altered fibroblast growth factor (Fgf)-7 and -2 binding due to changes in the micro-heterogeneity of skin Dcn(-/-) CS/DS. To better delineate the role of decorin, we used a 3D Dcn(-/-) fibroblast cell culture model. We found that the CS/DS extracts of wild-type and Dcn(-/-) fibroblasts were similar to the skin sugars, and this correlated with the lack of uronyl 2-O sulfotransferase in the Dcn(-/-) fibroblasts. Moreover, Ffg7 binding to total CS/DS was attenuated in the Dcn(-/-) samples. Surprisingly, wild-type CS/DS significantly reduced the binding of Fgf7 to keratinocytes in concentration dependent manner unlike the Dcn(-/-) CS/DS that only affected the binding at higher concentrations. Although binding to cell-surfaces was quite similar at higher concentrations, keratinocyte proliferation was differentially affected. Higher concentration of Dcn(-/-) CS/DS induced proliferation in contrast to wild-type CS/DS. 3D co-cultures of fibroblasts and keratinocytes showed that, unlike Dcn(-/-) CS/DS, wild-type CS/DS promoted differentiation of keratinocytes. Collectively, our results provide novel mechanistic explanations for the reported defects in wound healing in Dcn(-/-) mice and possibly Ehlers-Danlos patients. Moreover, the lack of decorin-derived DS and an altered CS/DS composition differentially influence keratinocyte behavior.