We have investigated the expression patterns and subcellular localization in nervous tissue of glypican, a major glycosylphosphatidylinositol-anchored heparan sulfate proteoglycan that is predominantly synthesized by neurons, and of biglycan, a small, leucine-rich chondroitin sulfate proteoglycan. By laser scanning confocal microscopy of rat central nervous tissue and C6 glioma cells, we found that a significant portion of the glypican and biglycan immunoreactivity colocalized with nuclear staining by propidium iodide and was also seen in isolated nuclei. In certain regions, staining was selective, insofar as glypican and biglycan immunoreactivity in the nucleus was seen predominantly in a subpopulation of large spinal cord neurons. The amino acid sequences of both proteoglycans contain potential nuclear localization signals, and these were demonstrated to be functional based on their ability to target beta-galactosidase fusion proteins to the nuclei of transfected 293 cells. Nuclear localization of glypican beta-galactosidase or Fc fusion proteins in transfected 293 cells and C6 glioma cells was greatly reduced or abolished after mutation of the basic amino acids or deletion of the sequence containing the nuclear localization signal, and no nuclear staining was seen in the case of heparan sulfate and chondroitin sulfate proteoglycans that do not possess a nuclear localization signal, such as syndecan-3 or decorin (which is closely related in structure to biglycan). Transfection of COS-1 cells with an epitope-tagged glypican cDNA demonstrated transport of the full-length proteoglycan to the nucleus, and there are also dynamic changes in the pattern of glypican immunoreactivity in the nucleus of C6 cells both during cell division and correlated with different phases of the cell cycle. Our data therefore suggest that in certain cells and central nervous system regions, glypican and biglycan may be involved in the regulation of cell division and survival by directly participating in nuclear processes.