O-Sulfation at C-3 of N-sulfated GlcN units concludes polymer modification and the formation of antithrombin binding regions in the biosynthesis of heparin/heparan sulfate. The resulting GlcNSO3(3-OSO3) units are largely restricted to heparin chains with high affinity for antithrombin (HA heparin). Low affinity (LA) heparin fails to serve as a substrate in the 3-O-sulfotransferase reaction yet contains potential 3-O-sulfate acceptor sites (Kusche, M., Torri, G., Casu, B., and Lindahl, U. (1990) J. Biol. Chem. 265, 7292-7300), as verified in the present study using a novel sequencing procedure. O-Desulfated, re-N-sulfated LA heparin, as well as an octasaccharide fraction isolated after heparinase I digestion of LA heparin, both yielded labeled HA components following incubation with solubilized mouse mastocytoma microsomal enzymes and [35S]adenosine 3'-phosphate 5'phosphosulfate (PAPS), suggesting that the 3-O-sulfo-transferase may be inhibited by sulfated saccharide sequences outside the 3-O-sulfate acceptor region. Indeed, the addition of LA heparin precluded enzymatic 3-O-sulfation of a synthetic pentasaccharide substrate. The Km for the pentasaccharide was determined to approximately be 6 microM. Incubations of mixed pentasaccharide substrate and saccharide inhibitors revealed Ki values for intact LA heparin and for a heparin octasaccharide fraction of approximately 1.3 and approximately 0.7 microM, respectively. Inhibition experiments with selectively desulfated heparin indicated that both IdoA 2-O-sulfate and GlcN 6-O-sulfate groups contributed to the inhibition of the 3-O-sulfotransferase. By contrast, chondroitin sulfate or dermatan sulfate showed no significant inhibitory activity. It is proposed that the regulation of GlcN 3-O-sulfation during biosynthesis of heparin/heparan sulfate depends on the topological organization of the membrane-bound enzyme machinery in the intact cell.