Heparanase activity is highly implicated in cell dissemination associated with tumor metastasis, angiogenesis, and inflammation. Heparanase expression is induced in many hematological and solid tumors, associated with poor prognosis. Heparanase homolog, termed heparanase 2 (Hpa2), was cloned based on sequence homology. Detailed characterization of Hpa2 at the biochemical, cellular, and clinical levels has not been so far reported, and its role in normal physiology and pathological disorders is obscure. We provide evidence that unlike heparanase, Hpa2 is not subjected to proteolytic processing and exhibits no enzymatic activity typical of heparanase. Notably, the fulllength Hpa2c protein inhibits heparanase enzymatic activity, likely due to its high affinity to heparin and heparan sulfate and its ability to associate physically with heparanase. Hpa2 expression was markedly elevated in head and neck carcinoma patients, correlating with prolonged time to disease recurrence (follow-up to failure; p ؍ 0.006) and inversely correlating with tumor cell dissemination to regional lymph nodes (N-stage; p ؍ 0.03). Hpa2 appears to restrain tumor metastasis, likely by attenuating heparanase enzymatic activity, conferring a favorable outcome of head and neck cancer patients.