Stromal cell-derived factor-1 (SDF-1) is a CXC chemokine that is constitutively expressed in most tissues and displayed on the cell surface in association with heparan sulfate (HS). Its numerous biological effects are mediated by a specific G protein-coupled receptor, CXCR4. A number of cells inactivate SDF-1 by specific processing of the N-terminal domain of the chemokine. In particular, CD26/dipeptidyl peptidase IV (DPP IV), a serine protease that co-distributes with CXCR4 at the cell surface, mediates the selective removal of the N-terminal dipeptide of SDF-1. We report here that heparin and HS specifically prevent the processing of SDF-1 by DPP IV expressed by Caco-2 cells. The level of processing increases with the level of differentiation of these cells, which correlates with an increase of DPP IV activity. A mutant SDF-1 that does not interact with HS is readily cleaved by DPP IV, a process that is not inhibited by HS, demonstrating that a productive interaction between HS and SDF-1 is required for the protection to take place. Moreover, we found that protection depends on the degree of polymerization of the HS sulfated S-domains. Finally a structural model of SDF-1, in complex with HS oligosaccharides of defined length, rationalizes the experimental data. The mechanisms by which HS regulates SDF-1 may thus include, in addition to its ability to locally concentrate the chemokine at the cell surface, a control of selective protease cleavage events that directly affect the chemokine activity.