Heparanase is an endoglycosidase that cleaves heparan sulfate, the main polysaccharide component of the extracellular matrix. Heparan sulfate moieties are responsible for the extracellular matrix barrier function, as well as for sequestration of heparin-binding growth factors in the extracellular matrix. Degradation of heparan sulfate by heparanase enables cell movement through extracellular barriers and releases growth factors from extracellular matrix depots, making them bioavailable. Here, we demonstrate a highly coordinated temporospatial pattern of heparanase expression and enzymatic activity during hair follicle cycling. This pattern paralleled the route and timing of follicular stem cell progeny migration and reconstitution of the lower part of the follicle, which is a prerequisite for hair shaft formation. By monitoring in vivo activation of luciferase reporter gene driven by heparanase promoter, we observed activation of heparanase gene transcription at a specific stage of the hair cycle. Heparanase was produced by rat vibrissa bulge keratinocytes, closely related to a follicular stem cell population. Heparanase contributed to the ability of the bulge-derived keratinocytes to migrate through the extracellular matrix barrier in vitro. In heparanase-overexpressing transgenic mice, increased levels of heparanase enhanced active hair growth and enabled faster hair recovery after chemotherapy-induced alopecia. Collectively, our results identify heparanase as an important regulator of hair growth and suggest that cellular mechanisms of its action involve facilitation of follicular stem cell progeny migration and release of extracellular matrix-resident, heparin-bound growth factors, thus regulating hair cycle.