The mammalian endoglycosidase heparanase (Hpa1) is primarily responsible for cleaving heparan sulphate proteoglycans (HSPGs) present on the basement membrane of cells and its potential for remodelling the extracellular matrix (ECM) could be important in embryonic development and tumour metastasis. Elevated expression of this enzyme has been implicated in various pathological processes including tumour cell proliferation, metastasis, inflammation and angiogenesis. The enzyme therefore represents a potential therapeutic target. Hpa1 protein is initially synthesized as an inactive 65 kDa proenzyme that is then believed to be subsequently activated by proteolytic cleavage to generate an active heterodimer of 8 and 50 kDa polypeptides. By analysis of a series of Hpa1 deletion proteins we confirm that the 8 kDa subunit is essential for enzyme activity. We present here for the first time an insect cell expression system used for the generation of large amounts of recombinant protein of high specific activity. Individual subunits were cloned into baculoviral secretory vectors and co-expressed in insect cells. Active secreted heterodimer protein was recovered from the medium and isolated by a one-step heparin-Sepharose chromatography procedure to give protein of >90% purity. The recombinant enzyme behaved similarly to the native protein with respect to the size of HS fragments liberated on digestion, substrate cleavage specificity and its preference for acidic pH. A significant amount of activity, however, was also detectable at physiological pH values, as measured both by an in vitro assay and by in vivo degradation of cell-bound heparan sulphate.