Sulfatases (Sulfs) are a group of endosulfatases consisting of Sulf1 and Sulf2, which specifically remove sulfate from heparan sulfate proteoglycans. Although several studies have shown that Sulf1 acts as a regulator of sonic hedgehog (Shh) signaling during embryonic ventral spinal cord development, the detailed expression pattern and function of Sulf2 in the spinal cord remains to be determined. In this study, we found that Sulf2 also modulates the cell fate change from motor neurons (MNs) to oligodendrocyte precursor cells (OPCs) by regulating Shh signaling in the mouse ventral spinal cord in coordination with Sulf1. In the mouse, Sulf mRNAs colocalize with Shh mRNA and gradually expand dorsally from embryonic day (E) 10.5 to E12.5, following strong Patched1 signals (a target gene of Shh signaling). This coordinated expression pattern led us to hypothesize that in the mouse, strong Shh signaling is induced when Shh is released by Sulf1/2, and this strong Shh signaling subsequently induces the dorsal expansion of Shh and Sulf1/2 expression. Consistent with this hypothesis, in the ventral spinal cord of Sulf1 knockout (KO) or Sulf2 KO mice, the expression patterns of Shh and Patched1 differed from that in wild-type mice. Moreover, the position of the pMN and p3 domains were shifted ventrally, MN generation was prolonged, and OPC generation was delayed at E12.5 in both Sulf1 KO and Sulf2 KO mice. These results demonstrated that in addition to Sulf1, Sulf2 also plays an important and overlapping role in the MN-to-OPC fate change by regulating Shh signaling in the ventral spinal cord. However, neither Sulf1 nor Sulf2 could compensate for the loss of the other in the developing mouse spinal cord. In vitro studies showed no evidence of an interaction between Sulf1 and Sulf2 that could increase sulfatase activity. Furthermore, Sulf1/2 double heterozygote and Sulf1/2 double KO mice exhibited phenotypes similar to the Sulf1 KO and Sulf2 KO mice. These results indicate that there is a threshold for sulfatase activity (which is likely reflected in the dose of Shh) required to induce the MN-to-OPC fate change, and Shh signaling requires the coordinated activity of Sulf1 and Sulf2 in order to reach that threshold in the mouse ventral spinal cord.