Syndecan-1 is a cell-surface, heparan-sulphate proteoglycan (HSPG) predominantly expressed by epithelial cells. It binds specifically to many proteins, including oncoproteins. For example, it induces the assembly of a signalling complex between FGF ligands and their cognate receptors. But so far there has been no direct evidence that this proteoglycan contributes to tumorigenesis. Here we have examined the role of syndecan-1 (encoded by Sdc1) during mammary tumour formation in response to the ectopic expression of the proto-oncogene Wnt1. We crossed syndecan-1-deficient mice with transgenic mice that express Wnt1 in mammary gland (TgN(Wnt-1)1Hev; ref. 2). Ectopic Wnt-1 expression induces generalized mammary hyperplasia, followed by the development of solitary tumours (median time 22 weeks). We show that in Sdc1-/- mice, Wnt-1-induced hyperplasia in virgin mammary gland was reduced by 70%, indicating that the Wnt-1 signalling pathway was inhibited. Of the 39 tumours that developed in a test cohort of mice, only 1 evolved in the Sdc1-/- background. In addition, we show that soluble syndecan-1 ectodomain purified from mouse mammary epithelial cells stimulates the activity of a Wnt-1 homologue in a tissue culture assay. Our results provide both genetic and biochemical evidence that syndecan-1 can modulate Wnt signalling, and is critical for Wnt-1-induced tumorigenesis of the mouse mammary gland.