Sulfation of macromolecules requires the translocation of a high energy form of nucleotide sulfate, i.e. 3'-phosphoadenosine 5'-phosphosulfate (PAPS), from the cytosol into the Golgi apparatus. In this study, we identified a novel Drosophila PAPS transporter gene dPAPST2 by conducting data base searches and screening the PAPS transport activity among the putative nucleotide sugar transporter genes in Drosophila. The amino acid sequence of dPAPST2 showed 50.5 and 21.5% homology to the human PAPST2 and SLALOM, respectively. The heterologous expression of dPAPST2 in yeast revealed that the dPAPST2 protein is a PAPS transporter with an apparent K(m) value of 2.3 microm. The RNA interference of dPAPST2 in cell line and flies showed that the dPAPST2 gene is essential for the sulfation of cellular proteins and the viability of the fly. In RNA interference flies, an analysis of the genetic interaction between dPAPST2 and genes that contribute to glycosaminoglycan synthesis suggested that dPAPST2 is involved in the glycosaminoglycan synthesis and the subsequent signaling. The dPAPST2 and sll genes showed a similar ubiquitous distribution. These results indicate that dPAPST2 may be involved in Hedgehog and Decapentaplegic signaling by controlling the sulfation of heparan sulfate.