Heparan sulfate (HS) proteoglycans modulate the activity of multiple growth factors on the cell surface and extracellular matrix. However, it remains unclear how the HS chains control the movement and reception of growth factors into targeted receiving cells during mammalian morphogenetic processes. Here, we found that HS-deficient Ext2 null mutant mouse embryos fail to respond to fibroblast growth factor (FGF) signaling.Marker expression analyses revealed that cell surface-tethered HS chains are crucial for local retention of FGF4 and FGF8 ligands in the extraembryonic ectoderm. Fine chimeric studies with single-cell resolution and expression studies with specific inhibitors for HS movement demonstrated that proteolytic cleavage of HS chains can spread FGF signaling to adjacent cells within a short distance. Together, the results show that spatiotemporal expression of cell surface-tethered HS chains regulate the local reception of FGF-signaling activity during mammalian embryogenesis.