Heparan sulfate proteoglycans (HSPG) have been implicated in regulating the signalling activities of secreted morphogen molecules including Wingless (Wg), Hedgehog (Hh) and Decapentaplegic (Dpp). HSPG consists of a protein core to which heparan sulfate (HS) glycosaminoglycan (GAG) chains are attached. The formation of HS GAG chains is catalyzed by glycosyltransferases encoded by members of the EXT family of putative tumor suppressors linked to hereditary multiple exostoses. Previous studies in Drosophila demonstrated that tout-velu (ttv), the Drosophila EXT1, is required for Hh movement. However, the functions of other EXT family members are unknown. We have identified and isolated the other two members of the Drosophila EXT family genes, which are named sister of tout-velu (sotv) and brother of tout-velu (botv), and encode Drosophila homologues of vertebrate EXT2 and EXT-like 3 (EXTL3), respectively. We show that both Hh and Dpp signalling activities, as well as their morphogen distributions, are defective in cells mutant for ttv, sotv or botv in the wing disc. Surprisingly, although Wg morphogen distribution is abnormal in ttv, sotv and botv, Wg signalling is only defective in botv mutants or ttv-sotv double mutants, and not in ttv nor sotv alone, suggesting that Ttv and Sotv are redundant in Wg signalling. We demonstrate further that Ttv and Sotv form a complex and are co-localized in vivo. Our results, along with previous studies on Ttv, provide evidence that all three Drosophila EXT proteins are required for the biosynthesis of HSPGs, and for the gradient formation of the Wg, Hh and Dpp morphogens. Our results also suggest that HSPGs have two distinct roles in Wg morphogen distribution and signalling.