Whole unfractionated heparin can modestly decrease tumor growth, but the dose of heparin is limited by its anticoagulant properties. To overcome this limitation, we modified the chemical structure of heparin and have prepared a heparin derivative by O-acylating low molecular weight heparin with butyric anhydride, producing a more potent antiproliferative compound, which is only weakly anticoagulant so that the dose may be escalated without threat of hemorrhage. In this study, we investigated the effect of this chemically modified heparin, butanoylated heparin, on the growth of lung cancer in vitro and in vivo. We found that butanoylated heparin a) significantly inhibited lung cancer cell proliferation in vitro and lung cancer growth in mice and rats; b) had very low anticoagulant effect; c) had no significant toxicity on heart, liver, kidney and lung; d) significantly although modestly induced apoptosis and decreased expression of the cell proliferation pathway consisting of mutant p53, phospho-Rb and E2F1 expression in the tumor tissues. We also found that butanoylated heparin significantly inhibited CXCL12 and CXCR4 expression, suggesting that CXCL12/CXCR4 axis may be involved in regulation of tumor growth inhibition by heparin. We concluded that chemically modified butanoylated heparin has potent antiproliferative activity against lung cancer and may represent a new chemical therapeutic agent for cancer patients.