Heparan sulfate proteoglycans (HSPGs) interact with numerous proteins of importance in animal development and homeostasis. Heparanase, which is expressed in normal tissues and upregulated in angiogenesis, cancer and inflammation, selectively cleaves beta-glucuronidic linkages in HS chains. In a previous study, we transgenically overexpressed heparanase in mice to assess the overall effects of heparanase on HS metabolism. Metabolic labeling confirmed extensive fragmentation of HS in vivo. In the current study we found that in liver showing excessive heparanase overexpression, HSPG turnover is accelerated along with upregulation of HS N- and O-sulfation, thus yielding heparin-like chains without the domain structure typical of HS. Heparanase overexpression in other mouse organs and in human tumors correlated with increased 6-O-sulfation of HS, whereas the domain structure was conserved. The heavily sulfated HS fragments strongly promoted formation of ternary complexes with fibroblast growth factor 1 (FGF1) or FGF2 and FGF receptor 1. Heparanase thus contributes to regulation of HS biosynthesis in a way that may promote growth factor action in tumor angiogenesis and metastasis.