Heparanase is a heparan sulfate (HS) degrading endoglucuronidase that has been implicated in cell migration and inflammatory conditions. Here we used mice deficient of heparanase (Hpse -/-) to study the impact of heparanase on airway leukocytes. Normal numbers of macrophages and lymphocytes were present in bronchoalveolar lavage fluid of Hpse-/-mice, indicating that heparanase is not essential for proper homing of leukocytes to airways. While lymphocytes fromHpse -/-mice displayed normal morphology, Hpse -/-alveolar macrophages showed a striking, age-dependent appearance of granule-like structures in the cytoplasm.Transmission electron microscopy revealed that these structures corresponded to membrane-enclosed crystalline bodies that closely resembled the intracellular crystals known to be formed by the HS-binding protein Ym1, suggesting that heparanase deficiency is associated with intracellular Ym1 deposition. Indeed, applying immunocytochemistry, we found markedly higher levels of intracellular