The current study clarifies the role of the Glycosaminoglycan (GAG)-binding domain of insulin-like growth factor binding protein-3 (IGFBP-3) in cell penetration. The cell penetration function of IGFBP-3 has been mapped to an 18-residue GAG-binding domain in the C-terminal region that mobilizes cellular uptake and nuclear localization of unrelated proteins. Uptake of KW-22, a 22-residue peptide that encompasses the 18-residue GAG-binding domain, and another IGFBP-3 peptide carrying a streptavidin protein cargo was investigated in Chinese hamster ovary (CHO) cells defective at several steps of biosynthesis of cell surface GAGs. The severity of GAG truncation was highly correlated to the impairment of uptake ranging from complete abrogation to only a partial reduction, suggesting that GAG-binding is required for uptake. The 18-residue GAG-binding domain consists of an 8-residue KK-8 basic sequence devoid of Arg and an adjacent 10-residue QR-10 sequence rich in Arg. Peptide mapping of uptake and GAG-binding activities within the KW-22 peptide showed that the 8-residue KK-8 basic peptide retained 80% of GAG-binding activity with no uptake activity while the 10-residue QR-10 peptide retained 53% of uptake activity and 18% of GAG-binding activity. This suggests that KK-8 carries out the majority of GAG-binding function while QR-10 carries out the majority of the cell entry function. To our knowledge, this is the first report of physical separation of the uptake and GAG-binding functions within a short cell penetrating peptide and may shed light on the general mechanism of uptake of Arg-rich CPPs and guide new design of Arg-rich CPP-assisted drug/gene delivery systems.