In mucopolysaccharidosis-I (MPS-I), alpha-L-iduronidase deficiency leads to progressive heparan sulfate (HS) and dermatan sulfate (DS) glycosaminoglycan (GAG) accumulation. The functional consequences of these accumulated molecules are unknown. HS critically influences tissue morphogenesis by binding to and modulating the activity of several cytokines (eg, fibroblast growth factors [FGFs]) involved in developmental patterning. We recently isolated a multipotent progenitor cell from postnatal human bone marrow, which differentiates into cells of all 3 embryonic lineages. The availability of multipotent progenitor cells from healthy volunteers and patients with MPS-I (Hurler syndrome) provides a unique opportunity to directly examine the functional effects of abnormal HS on cytokine-mediated stem-cell proliferation and survival. We demonstrate here that abnormally sulfated HS in Hurler multipotent progenitor cells perturb critical FGF-2-FGFR1-HS interactions, resulting in defective FGF-2-induced proliferation and survival of Hurler multipotent progenitor cells. Both the mitogenic and survival-promoting activities of FGF-2 were restored by substitution of Hurler HS by normal HS. This perturbation of critical HS-cytokine receptor interactions may represent a mechanism by which accumulated HS contributes to the developmental pathophysiology of Hurler syndrome. Similar mechanisms may operate in the pathogenesis of other diseases where structurally abnormal GAGs accumulate.