Syndecan-1 is a heparan sulphate proteoglycan expressed on the cell surface and shed by epithelial lung tumors. We here demonstrate that syndecan-1 is critically involved in lung tumor growth and metastasis in vitro and vivo and investigate the regulatory role of its cellular cleavage fragments.Shedding of syndecan-1 from the cell surface generates a transmembrane C-terminal fragment (tCTF), which can be further processed by g-secretase into a cytoplasmic fragment (cCTF). Scratch-induced wound closure of cultured lung epithelial A549 tumor cells associates with increased syndecan-1 cleavage and generation of the tCTF. Cell proliferation, migration, invasion into matrigel, integrin upregulation and promigratory signaling are suppressed by silencing of syndecan-1. This is restored by overexpression of syndecan-1 tCTF but not by overexpression of the cCTF. Instead the cCTF suppressed the promigratory function of endogenous syndecan-1. Finally, lung metastasis formation of A549 cells in SCID mice required the presence of either syndecan-1 or its tCTF, whereas the cCTF suppressed the activity of endogenous syndecan -1.Thus, the tCTF of syndecan-1 by itself can mediate critical functions in lung tumor formation and therefore can replace full length syndecan-1 in the situation of increased syndecan-1 shedding during cell migration. However, this activity is limited by further syndecan-1 proteolysis into the cCTF which even generates a cytoplasmic antagonist of endogenous syndecan-1. On the basis of this knowledge we generated a peptide blocking the promigratory activity of syndecan-1which may therefore be useful to suppress lung tumor cell migration.