Posttranslational tyrosine sulfation of peptides and proteins is catalysed by tyrosylprotein sulfotransferases (TPSTs). In Arabidopsis, tyrosine sulfation is essential for the activities of peptide hormones, such as phytosulfokine (PSK) and root meristem growth factor (RGF). Here, we identified a TPST-encoding gene, MtTPST, from model legume Medicago truncatula. MtTPST expression was detected in all organs, with the highest level in root nodules. A promoter:GUS assay revealed that MtTPST was highly expressed in the root apical meristem, nodule primordium and nodule apical meristem. The loss-of-function mutant mttpst exhibited a stunted phenotype with short roots and reduced nodule number and size. Application of both of the sulfated peptides PSK and RGF3 partially restored the defective root length of mttpst. The reduction in symbiotic nodulation in mttpst was partially recovered by treatment with sulfated PSK peptide. MtTPST-PSK module functions downstream of the Nod factor signalling to promote nodule initiation via regulating accumulation and/or signalling of cytokinin and auxin. Additionally, the small-nodule phenotype of mttpst, which resulted from decreased apical meristematic activity, was partially complemented by sulfated RGF3 treatment. Together, these results demonstrate that MtTPST, through its substrates PSK, RGF3 and other sulfated peptide(s), positively regulates nodule development and root growth.