Stem cell division is activated to trigger regeneration in response to tissue damage. The molecular mechanisms by which this stem cell mitotic activity is properly repressed at the end of regeneration are poorly understood. Here, we show that a specific modification of heparan sulfate is crucial for regulating Drosophila intestinal stem cell (ISC) division during normal midgut homeostasis and regeneration. Loss of the extracellular heparan sulfate endosulfatase Sulf1 resulted in increased ISC division during normal homeostasis, which was caused by upregulation of mitogenic signaling including the JAK-STAT, EGFR and Hedgehog pathways. Using a regeneration model, we found that ISCs failed to properly halt division at the termination stage in Sulf1 mutants, showing that Sulf1 is required for terminating ISC division at the end of regeneration. We propose that post-transcriptional regulation of mitogen signaling by heparan sulfate structural modifications provides a new regulatory step for precise temporal control of stem cell activity during regeneration.