The subcellular localization of a heparan sulfate degrading endoglycosidase, heparanase, was studied in human neutrophils. Unstimulated cells were disrupted by nitrogen cavitation and fractionated on a Percoll density gradient into three components, separating the plasma membranes, specific granules, and azurophilic granules. Heparanase activity was measured by gel filtration analysis of 35S-labeled degradation fragments released from subendothelial extracellular matrix (ECM) or produced during incubation with soluble, ECM-derived, heparan sulfate proteoglycans. Heparanase activity was found mainly in fractions containing the specific granules; this activity was inhibited by heparin. Freezing and thawing was not needed for recovery of the enzyme from the subcellular fraction, confirming previous data about its ready release. The mechanism of the ready release of heparanase from the specific granules requires further investigation.