Bone morphogenetic protein (BMP) signalling is key to many developmental processes, including early regionalisation of the ectoderm. The neural crest is induced here by a combination of BMP and Wnt signals from nearby tissues with many secreted factors contributing to its initial specification at the neural plate border. Gremlin 1 (Grem1) is a secreted BMP antagonist expressed in the neural crest in Xenopus laevis but its function here is unknown. As well as binding BMPs, Grem1 has been shown to interact with heparan sulfate proteoglycans (HSPGs), a family of cell surface macromolecules that regulate a diverse array of signalling molecules by affecting their availability and mode of action. This study describes the impact of HSPGs on the function of Grem1 in neural crest induction. It shows for the first time that Grem1 is required for neural crest development in a two-step process comprising an early HSPG-independent, followed by a late HSPG-dependent phase.