Heparanase is an endo-P-D-glucuronidase that de grades the glycosaminoglycan chains of heparan sulfate (HS) proteoglycans at specific sites, Elevated levels of heparanase are associated with the metastatic potential of melanoma and other types of tumor cells, We previously reported heparanase degradation of cell surface HS subpopulations of the human adenocarcinoma cell line RL95, In the present study, heparanase activity was examined on RL95 cell surface HS subpopulations in the presence of a synthetic peptide (CRPKAKAKAKAKDQTK) of heparin/heparan sulfate-interacting protein (HIP; Liu, S., Smith, S, E,, Julian, J,, Rohde, L, H., Karin, N. J., and Carson, D, D, (1996) J, Biol, Chem, 271, 11817-11823), Heparanase digestion generated HS fragments from cell surface- or extracellular matrix-derived HS of approximately 25 and 9 kDa, respectively, In contrast, HS of various size classes isolated from proteoglycans secreted or released by RL95 and endothelial cells in culture were not susceptible to heparanase digestion, Incubation of heparanase-containing melanoma cellular extracts or partially purified heparanase preparations with cell! surface- or ECM-derived HS and HIP peptide, but not a scrambled sequence of this peptide or other HS-binding proteins present in ECM, completely inhibited heparanase action, Conversely, predigestion of cell surface HS with either heparanase-containing cellular extracts or with secreted or partially purified heparanase destroyed binding to HIP peptide, Preincubation of HS with HIP peptide prevented subsequent heparanase digestion. Collectively, these data demonstrate that HIP peptide and heparanase recognize specific, common motifs within HS chains at cell surfaces and in ECM add may mutually modulate HS-dependent activities.