Heparan sulfate proteoglycans bind to and regulate many inflammatory mediators in vitro, suggesting that they serve an important role in influencing inflammatory responses in vivo. Here we evaluated the role of syndecan-1, a major heparan sulfate proteoglycan, in modulating inflammatory responses in Gram-positive toxic shock, a systemic disease that is a significant cause of morbidity and mortality. Syndecan-1-null and wild-type mice were injected intraperitoneally with staphylococcal enterotoxin B, a pyrogenic superantigen, and their inflammatory responses were assessed. Syndecan-1-null mice showed significantly increased liver injury, vascular permeability, and death in response to staphylococcal enterotoxin B challenge compared with wild-type mice. Although serum levels of systemic IL-2 and IFN␥ were similar between the two backgrounds, those of TNF␣ and IL-6 were significantly increased in syndecan-1-null mice undergoing Gram-positive toxic shock. Furthermore, syndecan-1-null mice challenged with staphylococcal enterotoxin B showed enhanced T cell accumulation in tissues, whereas immunodepletion of T cells protected syndecan-1-null mice from the magnified systemic cytokine storm, inflammatory tissue injury, and death. Importantly, syndecan-1 shedding was induced in wild-type mice injected with staphylococcal enterotoxin B, and the administration of heparan sulfate, but not syndecan-1 core protein, rescued syndecan-1-null mice from lethal toxic shock by suppressing the production of TNF␣ and IL-6, and attenuating inflammatory tissue injury. Altogether, these data suggest that syndecan-1 shedding is a key endogenous mechanism that protects the host from Gram-positive toxic shock by inhibiting the dysregulation and amplification of the inflammatory response.