Epidermal proliferation and differentiation can be regulated by soluble morphogens and growth factors. Heparan sulfate proteoglycans (HSPGs) modulate the action of several of these effector molecules, such as members of the fibroblast growth factor (FGF) and Wnt families. Syndecan-1 is a cell-surface proteoglycan that is expressed in differentiating keratinocytes and transiently upregulated in all layers of the epidermis upon tissue injury. To address the role of syndecan-1 in the regulation of keratinocyte proliferation and differentiation, we generated transgenic mice that overexpress syndecan-1 under K14 keratin promoter in the basal layer of the epidermis. We observed epidermal hyperproliferation in newborn transgenic mice, as evidenced by increased number of suprabasal cell layers, elevated proliferating cell nuclear antigen (PCNA) expression in both basal and suprabasal cell layers and by expression of keratin 6 in the interfollicular epidermis. Compared to both wild-type and syndecan-1-null animals, the transgene expression interfered with skin wound healing in adult mice by decreasing cell proliferation in the re-epithelialized epidermis. Thus, syndecan-1 regulates keratinocyte proliferation differently during skin development and in healing wounds.