Cleavage of heparan sulfate (HS) proteoglycans affects the integrity and function of tissues and thereby fundamental phenomena, involving cell migration and response to changes in the extracellular microenvironment. The role of HS-degrading enzymes, commonly referred to as heparanases, in normal development has not been identified. The present study focuses on cloning, expression, and properties of a chicken heparanase and its distribution in the developing chicken embryo. We have identified a chicken EST, homologous to the recently cloned human heparanase, to clone and express a functional chicken heparanase, 60% homologous to the human enzyme. The full-length chicken heparanase cDNA encodes a 60-kDa proenzyme that is processed at the N terminus into a 45-kDa highly active enzyme. The most prominent difference between the chicken and human enzymes resides in the predicted signal peptide sequence, apparently accounting for the chicken heparanase being readily secreted and localized in close proximity to the cell surface. In contrast, the human enzyme is mostly intracellular, localized in perinuclear granules. Cells transfected with a chimeric construct composed of the chicken signal peptide preceding the human heparanase exhibited cell surface localization and secretion of heparanase, similar to cells transfected with the full-length chicken enzyme. We examined the distribution pattern of the heparanase enzyme in the developing chicken embryo. Both the chicken heparanase mRNA and protein were expressed, as early as 12 h post fertilization, in cells migrating from the epiblast and forming the hypoblast layer. Later on (72 h), the enzyme is preferentially expressed in cells of the developing vascular and nervous systems. Cloning and characterization of heparanase, the first and single functional vertebrate HS-degrading enzyme, may lead to identification of other glycosaminoglycan degrading enzymes, toward elucidation of their significance in normal and pathological processes.