Mouse embryonic stem (mES) cells express a low sulfated form of heparan sulfate (HS). HS chains displayed by ES cells and their progeny become more complex and more sulfated during progression from pluripotency to neuroectodermal precursors. Sulfated epitopes are important for recognition and binding of a variety of ligands including members of the fibroblast growth factor (FGF) family. We demonstrated previously that mES cells lacking HS cannot undergo neural specification but this activity can be recovered by adding soluble heparin, a highly sulfated glycosaminoglycan (GAG). Therefore, we hypothesized that soluble GAGs might be used to support neural differentiation of HS competent cells and that the mechanisms underlying this activity might provide useful information about the signaling pathways critical for loss of pluripotency and early lineage commitment. In this study, we demonstrate that specific HS/heparin polysaccharides support formation of Sox1 1 neural progenitor cells from wild-type ES cells. This effect is dependent on sulfation pattern, concentration, and length of saccharide. Using a selective inhibitor of FGF signal transduction, we show that heparin modulates signaling events regulating exit from pluripotency and commitment to primitive ectoderm and subsequently neuroectoderm. Interestingly, we were also able to demonstrate that multiple receptor tyrosine kinases were influenced by HS in this system. This suggests roles for additional factors, possibly in cell proliferation or protection from apoptosis, during the process of neural specification. Therefore, we conclude that soluble GAGs or synthetic mimics could be considered as suitable low-cost factors for addition to ES cell differentiation regimes. STEM CELLS 2011;29:629-640 Disclosure of potential conflicts of interest is found at the end of this article.