Heparin and heparan sulfate are linear sulfated polysaccharides that exert a multitude of biological functions. Heparan sulfate glucosaminyl N-deacetylase/N-sulfotransferase isoform 2 (NDST-2), a key enzyme in the biosynthesis of heparin, contains two distinct activities. This bifunctional enzyme removes the acetyl group from N-acetylated glucosamine (N-deacetylase activity) and transfers a sulfuryl group to the unsubstituted amino position (N-sulfotransferase activity). The N-sulfotransferase activity of NDST has been unambiguously localized to the C-terminal domain of NDST. Here, we report that the N-terminal domain of NDST-2 retains N-deacetylase activity. The N-terminal domain (A66-P604) of human NDST-2, designated as N-deacetylase (NDase), was cloned as a (His)(6)-fusion protein, and protein expression was carried out in Escherichia coli. Heparosan treated with NDase contains N-unsubstituted glucosamine and is highly susceptible to N-sulfation by N-sulfotransferase. Our results conclude that the N-terminal domain of NDST-2 contains functional N-deacetylase activity. This finding helps further elucidate the mechanism of action of heparan sulfate N-deacetylase/N-sulfotransferases and the biosynthesis of heparan sulfate in general. (c) 2005 Elsevier Inc. All rights reserved.