The O-linked-N-acetylglucosamine (O-GlcNAc) modification of cytoplasmic and nuclear proteins regulates basic cellular functions and is involved in the aetiology of diabetes and neurodegeneration. This intracellular O-GlcNAcylation is catalyzed by a single O-GlcNAc transferase, OGT. Here we report a novel OGT, EOGT, responsible for extracellular O-GlcNAcylation. Although both OGT and EOGT are regulated by hexosamine flux, EOGT localizes to the lumen of the endoplasmic reticulum and transfers GlcNAc to epidermal growth factor-like domains in an OGT-independent manner. Loss of Eogt gives phenotypes similar to those caused by defects in the apical extracellular matrix. Dumpy (Dp), a membrane-anchored extracellular protein, is O-GlcNAcylated, and EOGT is required for Dp-dependent epithelial cell-matrix interactions. Thus, O-GlcNAcylation of secreted and membrane glycoproteins is a novel mediator of cell-cell or cell-matrix interactions at the cell surface.