The cell surface heparan sulfate proteoglycan syndecan-1 (CD138) modulates the activity of chemokines, cytokines, integrins, and other adhesion molecules which play important roles in the regulation of inflammation. We have previously shown that syndecan-1-deficient murine leukocytes display increased interactions with endothelial cells and increased diapedesis in vivo and in vitro. In this study, we demonstrate that syndecan-1 has an important function as a negative modulator in the murine contact allergy model of oxazolone-mediated delayed-type hypersensitivity (DTH). Following elicitation of the DTH response, syndecan-1-deficient mice showed an increase in leukocyte recruitment, resulting in an increased and prolonged edema formation. Expression of the cytokines TNF-alpha and IL-6 of the chemokines CCL5/RANTES and CCL-3/MIP-1alpha and of the adhesion molecule ICAM-1 were significantly increased in syndecan-1-deficient compared with wild-type mice. In wild-type mice, syndecan-1 mRNA and protein expression was reduced during the DTH response. The differentially increased adhesion of syndecan-1-deficient leukocytes to ICAM-1 was efficiently inhibited in vitro by CD18-blocking Abs, which emerges as one mechanistic explanation for the anti-inflammatory effects of syndecan-1. Collectively, our results show an important role of syndecan-1 in the contact DTH reaction, identifying syndecan-1 as a novel target in anti-inflammatory therapy.