The interaction of heparan sulfate with different ligand proteins depends on the precise location of O-sulfate groups in the polysaccharide chain. We have previously shown that overexpression in human kidney 293 cells of a mouse mastocytoma 2-O-sulfotransferase (2-OST), previously thought to catalyze the transfer of sulfate from 3'-phosphoadenosine 5'-phosphosulfate to C2 of L-iduronyl residues, preferentially increases the level of 2-O-sulfation of D-glucuronyl units [Rong, J., Habuchi, H., Kimata, K., Lindahl, U., and Kusche-Gullberg, M. (2000) Biochem. J. 346, 463-468]. In the study presented here, we further investigated the substrate specificity of the mouse mastocytoma 2-OST. Different polysaccharide acceptor substrates were incubated with cell extracts from 2-OST-transfected 293 cells together with the sulfate donor 3'-phosphoadenosine 5'-phospho[(35)S]sulfate. Incubations with O-desulfated heparin, predominantly composed of [(4)alphaIdoA(1)-(4)alphaGlcNSO(3)(1)-](n)(), resulted in 2-O-sulfation of iduronic acid. When, on the other hand, an N-sulfated capsular polysaccharide from Escherichia coli K5, with the structure [(4)betaGlcA(1)-(4)alphaGlcNSO(3)(1)-](n)(), was used as an acceptor, sulfate was transferred almost exclusively to C2 of glucuronic acid. Substrates containing both iduronic and glucuronic acid residues in about equal proportions strongly favored sulfation of iduronic acid. In agreement with these results, the 2-OST was found to have a approximately 5-fold higher affinity for iduronic acid-containing substrate disaccharide units (K(m) approximately 3.7 microM) than for glucuronic acid-containing substrate disaccharide units (K(m) approximately 19.3 microM).