Bone marrow stroma influences metastatic prostate cancer (PCa) progression, latency, and recurrence. At sites of PCa bone metastasis, cancer-associated fibroblasts and tumor-associated macrophages interact to establish a perlecan-rich desmoplastic stroma. As a heparan sulfate proteoglycan, perlecan (HSPG2) stores and stabilizes growth factors, including heparin-binding Wnt3A, a positive regulator of PCa cell growth. Because PCa cells alone do not induce CAF production of perlecan in the desmoplastic stroma, we sought to discover the sources of perlecan and its growth factor-releasing modifiers SULF1, SULF2, and heparanase in PCa cells and xenografts, bone marrow fibroblasts, and macrophages. SULF1, produced primarily by bone marrow fibroblasts, was the main glycosaminoglycanase present, a finding validated with primary tissue specimens of PCa metastases with desmoplastic bone stroma. Expression of both HSPG2 and SULF1 was concentrated in αSMA-rich stroma near PCa tumor nests, where infiltrating pro-tumor TAMs also were present. To decipher SULF1's role in the reactive bone stroma, we created a bone marrow biomimetic hydrogel incorporating perlecan, PCa cells, macrophages, and fibroblastic bone marrow stromal cells. Finding that M2-like macrophages increased levels of SULF1 and HSPG2 produced by fibroblasts, we examined SULF1 function in Wnt3A-mediated PCa tumoroid growth in tricultures. Comparing control or SULF1 knockout fibroblastic cells, we showed that SULF1 reduces Wnt3A-driven growth, cellularity, and cluster number of PCa cells in our 3D model. We conclude that SULF1 can suppress Wnt3A-driven growth signals in the desmoplastic stroma of PCa bone metastases, and SULF1 loss favors PCa progression, even in the presence of pro-tumorigenic TAMs.