ABSTRACT: Cell surface heparan sulfate (HS) proteoglycans shape organogenesis and homeostasis by capture and release of morphogens through mechanisms largely thought to exclude the core protein domain. Nevertheless, heparanase deglycanation of the N-terminal HS-rich domain of syndecan-1 (SDC1), but not SDC2 or -4, is a prerequisite for binding of the prosecretory mitogen lacritin (Ma, P., Beck, S. L., Raab, R. W., McKown, R. L., Coffman, G. L., Utani, A., Chirico, W. J., Rapraeger, A. C., and Laurie, G. W. (2006) Heparanase deglycanation of syndecan-1 is required for binding of the epithelial-restricted prosecretory mitogen lacritin. J. Cell Biol. 174, 1097-1106). We now report that the conserved and hydrophobic GAGAL domain in SDC1, adjacent to predicted HS substitution sites, is necessary to ligate and substantially enhance the ?-helicity of the amphipathic C terminus of lacritin. Swapping out GAGAL for GADED in SDC2 or for GDLDD in SDC4 (both less hydrophobic) abrogated binding. HS and chondroitin sulfate are also essential. Both are detected in the N terminus, and when incubated with antibodies HS4C3 (anti-HS) or IO3H10 (anti-chondroitin sulfate), binding was absent, as occurred when all three N-terminal glycosaminoglycan substitution sites were mutated to alanine or when cells were treated with 4-methylumbelliferyl-?-d-xylopyranoside or chlorate to suppress glycosaminoglycan substitution or sulfation, respectively. SDC1 interacts with the hydrophobic face of lacritin via Leu-108/Leu-109/Phe-112 as well as with Glu-103/Lys-107 and Lys-111 of the largely cationic face. Carving a hybrid hydrophobic/electrostatic docking site out of SDC1 in a manner dependent on endogenous heparanase is a dynamic process appropriate for subtle or broad epithelial regulation in morphogenesis, health, and disease.