Heparanase acts as a master regulator of the aggressive tumor phenotype in part by enhancing expression of proteins known to drive tumor progression (e.g. VEGF, MMP-9, hepatocyte growth factor (HGF), and RANKL). However, the mechanism whereby this enzyme regulates gene expression remains unknown. We previously reported that elevation of heparanase levels in myeloma cells causes a dramatic reduction in the amount of syndecan-1 in the nucleus. Because syndecan-1 has heparan sulfate chains and because exogenous heparan sulfate has been shown to inhibit the activity of histone acetyltransferase (HAT) enzymes in vitro, we hypothesized that the reduction in nuclear syndecan-1 in cells expressing high levels of heparanase would result in increased HAT activity leading to stimulation of protein transcription. We found that myeloma cells or tumors expressing high levels of heparanase and low levels of nuclear syndecan-1 had significantly higher levels of HAT activity when compared with cells or tumors expressing low levels of heparanase. High levels of HAT activity in heparanase-high cells were blocked by SST0001, an inhibitor of heparanase. Restoration of high syndecan-1 levels in heparanase-high cells diminished nuclear HAT activity, establishing syndecan-1 as a potent inhibitor of HAT. Exposure of heparanase-high cells to anacardic acid, an inhibitor of HAT activity, significantly suppressed their expression of VEGF and MMP-9, two genes known to be up-regulated following elevation of heparanase. These results reveal a novel mechanistic pathway driven by heparanase expression, which leads to decreased nuclear syndecan-1, increased HAT activity, and up-regulation of transcription of multiple genes that drive an aggressive tumor phenotype. © 2011 by The American Society for Biochemistry and Molecular Biology, Inc.