We have demonstrated previously that the Slit proteins, which are involved in axonal guidance and related developmental processes in nervous tissue, are ligands of the glycosylphosphatidylinositol-anchored heparan sulfate proteoglycan glypican-1 in brain (Liang, Y., Annan, R. S., Carr, S. A., Popp, S., Mevissen, M., Margolis, R. K., and Margolis, R. U. (1999) J. Biol. Chem. 274, 17885--17892). To characterize these interactions in more detail, recombinant human Slit-2 protein and the N- and C-terminal portions generated by in vivo proteolytic processing were used in an enzyme-linked immunosorbent assay to measure the binding of a glypican-Fc fusion protein. Saturable and reversible high affinity binding to the full-length protein and to the C-terminal portion that is released from the cell membrane was seen, with dissociation constants in the 80-110 nm range, whereas only a relatively low level of binding to the larger N-terminal segment was detected. Co-transfection of 293 cells with Slit and glypican-1 cDNAs followed by immunoprecipitation demonstrated that these interactions also occur in vivo, and immunocytochemical studies showed colocalization in the embryonic and adult central nervous system. The binding affinity of the glypican core protein to Slit is an order of magnitude lower than that of the glycanated proteoglycan. Glypican binding to Slit was also decreased 80--90% by heparin (2 microg/ml), enzymatic removal of the heparan sulfate chains, and by chlorate inhibition of glypican sulfation. The differential effects of N- or O-desulfated heparin on glypican binding also indicate that O-sulfate groups on the heparan sulfate chains play a critical role in heparin interactions with Slit. Our data suggest that glypican binding to the releasable C-terminal portion of Slit may serve as a mechanism for regulating the biological activity of Slit and/or the proteoglycan.