Among the four members of the syndecan family there exists a high level of divergence in the ectodomain core protein sequence. This has led to speculation that these core proteins bear important functional domains. However, there is little information regarding these functions, and thus far, the biological activity of syndecans has been attributed largely to their heparan sulfate chains. We have previously demonstrated that cell surface syndecan-1 inhibits invasion of tumor cells into three-dimensional gels composed of type I collagen. Inhibition of invasion is dependent on the syndecan heparan sulfate chains, but a role for the syndecan-1 ectodomain core protein was also indicated. To more closely examine this possibility and to map the regions of the ectodomain essential for syndecan-1-mediated inhibition of invasion, a panel of syndecan-1 mutational constructs was generated, and each construct was transfected individually into myeloma tumor cells. The anti-invasive effect of syndecan-1 is dramatically reduced by deletion of an ectodomain region close to the plasma membrane. Further mutational analysis identified a stretch of 5 hydrophobic amino acids, AVAAV (amino acids 222-226), critical for syndecan-1-mediated inhibition of cell invasion. This invasion regulatory domain is 26 amino acids from the start of the transmembrane domain. Importantly, this domain is functionally specific because its mutation does not affect syndecan-1-mediated cell binding to collagen, syndecan-1-mediated cell spreading, or targeting of syndecan-1 to specific cell surface domains. This invasion regulatory domain may play an important role in inhibiting tumor cell invasion, thus explaining the observed loss of syndecan-1 in some highly invasive cancers.