Heparanase is an endoglycosidase that specifically cleaves heparan sulfate side chains of heparan sulfate proteoglycans. Utilizing an ELISA method capable of detection and quantification of heparanase, we examined heparanase levels in the plasma and urine of a cohort of 29 patients diagnosed with type 2 diabetes mellitus (T2DM), 14 T2DM patients who underwent kidney transplantation, and 47 healthy volunteers. We provide evidence that heparanase levels in the urine of T2DM patients are markedly elevated compared to healthy controls (1162 ± 181 vs. 156 ± 29.6 pg/ml for T2DM and healthy controls, respectively), increase that is statistically highly significant (P<0.0001). Notably, heparanase levels were appreciably decreased in the urine of T2DM patients who underwent kidney transplantation, albeit remained still higher than healthy individuals (P<0.0001). Increased heparanase levels were also found in the plasma of T2DM patients. Importantly, urine heparanase was associated with elevated blood glucose levels, implying that glucose mediates heparanase upregulation and secretion into the urine and blood. Utilizing an in vitro system, we show that insulin stimulates heparanase secretion by kidney 293 cells, and even higher secretion is observed when insulin is added to cells maintained under high glucose conditions. These results provide evidence for a significant involvement of heparanase in diabetic complications.