Sulf2a belongs to the Sulf family of extracellular sulfatases which selectively remove 6-O-sulfate groups from heparan sulfates, a critical regulation level for their role in modulating the activity of signalling molecules. Data presented here define Sulf2a as a novel player in the control of Sonic Hedgehog (Shh)-mediated cell type specification during spinal cord development. We show that Sulf2a depletion in zebrafish results in overproduction of V3 interneurons at the expense of motor neurons and also impedes generation of oligodendrocyte precursor cells (OPCs), three cell types that depend on Shh for their generation. We provide evidence that Sulf2a, expressed in a spatially restricted progenitor domain, acts by maintaining the correct patterning and specification of ventral progenitors. More specifically, Sulf2a prevents Olig2 progenitors to activate high-threshold Shh response and, thereby, to adopt a V3 interneuron fate, thus ensuring proper production of motor neurons and OPCs. We propose a model in which Sulf2a reduces Shh signalling levels in responding cells by decreasing their sensitivity to the morphogen factor. More generally, our work, revealing that, in contrast to its paralog Sulf1, Sulf2a regulates neural fate specification in Shh target cells, provides direct evidence of non-redundant functions of Sulfs in the developing spinal cord.