Neural tissue is derived from three precursor regions: neural plate, neural crest, and preplacodal ectoderm. These regions are determined by morphogen-mediated signaling. Morphogen distribution is generally regulated by binding to an extracellular matrix component, heparan sulfate (HS) proteoglycan. HS is modified by many enzymes, such as N-deacetyl sulfotransferase 1 (Ndst1), which is highly expressed in early development. However, functions of HS modifications in ectodermal patterning are largely unknown. In this study, we analyzed the role of Ndst1 using Xenopus embryos. We found that ndst1 was expressed in anterior neural plate and the trigeminal region at the neurula stage. ndst1 overexpression expanded the neural crest (NC) region, whereas translational inhibition reduced not only the trigeminal region, but also the adjacent NC region, especially the anterior part. At a later stage, ndst1 knocked-down embryos showed defects in cranial ganglion formation. We also found that Ndst1 activates Wnt signaling pathway at the neurula stage. Taken together, our results suggest that N-sulfonated HS accumulates Wnt ligand and activates Wnt signaling in ndst1-expressing cells, but that it inhibits signaling in non-ndst1-expressing cells, leading to proper neuroectodermal patterning.