Thymus organogenesis and T cell development are coordinated by various soluble and cell-bound molecules. Heparan sulfate (HS) proteoglycans can interact with and immobilize many soluble mediators, creating fields or gradients of secreted ligands. While the role of HS in the development of many organs has been studied extensively, little is known about its function in the thymus. Here, we examined the distribution of HS in the thymus and the effect of its absence on thymus organogenesis and T cell development. We found that HS was expressed most abundantly on the thymic fibroblasts and at lower levels on endothelial, epithelial, and hematopoietic cells. To study the function of HS in the thymus, we eliminated most of HS in this organ by genetically disrupting the glycosyltransferase Ext1 that is essential for its synthesis. The absence of HS greatly reduced the size of the thymus in fetal thymic organ cultures and in vivo, in mice, and decreased the production of T cells. However, no specific blocks in T cell development were observed. Wild-type thymic fibroblasts were able to physically bind the homeostatic chemokines CCL19, CCL21, and CXCL12 ex vivo. However, this binding was abolished upon HS degradation, disrupting the CCL19/CCL21 chemokine gradients and causing impaired migration of dendritic cells in thymic slices. Thus, our results show that HS plays an essential role in the development and growth of the thymus and in regulating interstitial cell migration.