Mast cells are widely distributed in perivascular connective tissues, especially in areas of active tumor growth and vascular reactivity. Incubation of metabolically [35S]O4 = -labeled subendothelial extracellular matrix (ECM) with lysates of bone marrow-derived mouse mast cells (BMMC) resulted in extensive degradation of heparan sulfate (HS) into fragments 5 to 6 times smaller than intact HS side chains. A much lower activity (seven- to eightfold) was expressed by intact BMMC incubated in contact with the ECM. These fragments were not produced in the presence of heparin, were sensitive to deamination with nitrous acid, and resistant to further degradation with papain or chondroitinase ABC. These results indicate that an endoglycosidase (heparanase) is involved in BMMC-mediated degradation of HS in the subendothelial ECM. Heparanase activity was not detected in medium conditioned by cultured BMMC, or in lysates of Ableson transformed BMMC and rat basophilic leukemic (RBL) cells. Both heparanase and beta-hexosaminidase, a mast cell granule enzyme, were released on degranulation of BMMC induced by the calcium ionophore A23187, or by exposure to IgE-Ag, suggesting that heparanase is localized in the cell granules. Under these conditions, less than 5% of the cellular content of lactate dehydrogenase were released. Degradation of the ECM-HS by the mast cell heparanase and the associated release of HS-bound endothelial cell growth factors that are stored in ECM (Vlodavsky et al, Proc Natl Acad Sci USA 84:2292, 1987; Bashkin et al, Biochemistry 28:1737, 1989) may play a role in the proposed mast cell-mediated stimulation of neovascularization.