BETA2/NeuroD protein is important for regulating insulin gene transcription and for the terminal differentiation of islet cells, including insulin- and glucagon-producing cells. We reported that BETA2/NeuroD protein can permeate several cell types, including pancreatic islets, because of an arginine- and lysine-rich protein transduction domain (PTD) sequence in its structure. Here we provide genetic and biochemical evidence that cell membrane heparan sulfate proteoglycans are involved in extracellular BETA2/NeuroD internalization. We tested whether soluble glycosaminoglycans (GAGs) could inhibit BETA2/NeuroD internalization. Heparin almost completely prevented BETA2/NeuroD entry, whereas chondroitin sulfate A, B, and C caused only limited inhibition. Moreover, treatment with heparinase III impaired BETA2/NeuroD internalization, whereas treatment with chondroitinase ABC, or with chondroitinase AC, was completely ineffective in inhibiting BETA2/NeuroD internalization. We also examined various mutant cell lines originating from CHOK1 cells and defective in GAG biosynthesis. The observation using mutant cell lines supports the notion that the selective sulfation of heparan sulfate is an important determinant for NeuroD/heparan sulfate recognition. These data indicate that cell surface heparan sulfate proteoglycans are required for BETA2/NeuroD internalization and that BETA2/NeuroD protein transduction could be a safe and valuable strategy for enhancing insulin gene transcription without requiring gene transfer technology.