Aggrecan is the major proteoglycan in the extracellular matrix of cartilage. A notable exception is nanomelic cartilage, which lacks aggrecan in its matrix. The example of nanomelia and other evidence leads us to believe that the G3 domain plays an important role in aggrecan processing, and it has indeed been confirmed that G3 allows glycosaminoglycan (GAG) chain attachment and product secretion. However, it is not clear how G3, which contains at least a carbohydrate recognition domain (CRD) and a complement binding protein (CBP) motif, plays these two functional roles. The present study was designed to dissect the mechanisms of this phenomenon and specially 1) to determine the effects of various cysteine residues in GAG modification and product secretion as well as 2) to investigate which of the two processing events is the critical step in the product processing. Our studies demonstrated that removal of the two amino-terminal cysteines in the CRD motif and the single cysteine in the amino terminus of CBP inhibited secretion of CRD and CBP. Use of the double mutant CRD construct also allowed us to observe a deviation from the usual strict coupling of GAG modification and product secretion steps. The presence of a small chondroitin sulfate fragment overcame the secretion-inhibitory effects once the small chondroitin sulfate fragment was modified by GAG.