Pluripotent embryonic stem cells (ESCs) must select between alternative fates of self-renewal and lineage commitment at each division during continuous proliferation. Heparan sulfate (HS) is a highly sulfated polysaccharide and is present abundantly on the ESC surface. In this study, we investigated the role of HS in ESC self-renewal by examining Ext1(-/-) ESCs that are deficient in HS. We found that Ext1(-/-) ESCs retained their self-renewal potential but failed to transit from self-renewal to differentiation upon removal of leukemia inhibitory factor. Furthermore, we found that the aberrant cell fate commitment is caused by defects in fibroblast growth factor signaling, which directly retained high expression of the pluripotency gene Nanog in Ext1(-/-) ESCs. Therefore, our studies identified and defined HS as a novel factor that controls ESC fate commitment and also delineates that HS facilitates fibroblast growth factor signaling, which, in turn, inhibits Nanog expression and commits ESCs to lineage differentiation.