The activity of fibroblast growth factor 2 (FGF-2) is stringently controlled. Inactive in undisturbed tissues, it is activated during injury and is critical for tissue repair. We find that this control can be imposed by the soluble syndecan-1 ectodomain, a heparan sulfate proteoglycan shed from cell surfaces into wound fluids. The ectodomain potently inhibits heparin-mediated FGF-2 mitogenicity because of the poorly sulfated domains in its heparin sulfate chains. Degradation of these regions by platelet heparanase produces heparin-like heparin sulfate fragments that markedly activate FGF-2 mitogenicity and are found in wound fluids. These results establish a novel physiological control for FGF-2 and suggest new ways to modulate FGF activity.