Heparan sulfate proteoglycans (HS-PGs) regulate several developmental processes, but their possible roles in mandibular and TMJ formation are largely unclear. To uncover such roles, we generated mice lacking Golgi-associated N-sulfotransferase 1 (Ndst1) that catalyzes sulfation of HS-PG glycosaminoglycan chains. Ndst1-null mouse embryos exhibited different degrees of phenotypic penetrance. Severely affected mutants lacked the temporomandibular joint and condyle, but had a mandibular remnant that displayed abnormal tooth germs, substandard angiogenesis, and enhanced apoptosis. In mildly affected mutants, the condylar growth plate was dysfunctional and exhibited thicker superficial and polymorphic cell zones, a much wider distribution of Indian hedgehog signaling activity, and ectopic ossification along its lateral border. Interestingly, mildly affected mutants also exhibited facial asymmetry resembling that seen in individuals with hemifacial microsomia. Our findings indicate that Ndst1-dependent HS sulfation is critical for mandibular and TMJ development and allows HS-PGs to exert their roles via regulation of Ihh signaling topography and action.