Agrin is a basal lamina molecule that directs key events in postsynaptic differentiation, most notably the aggregation of acetylcholine receptors (AChRs) on the muscle cell surface. Agrin's AChR clustering activity is regulated by alternative mRNA splicing. Agrin splice forms having inserts at two sites (y and z) in the C-terminal region are highly active, but isoforms lacking these inserts are weakly active. The biochemical consequences of this alternative splicing are unknown. Here, the binding of four recombinant agrin isoforms to heparin, to alpha-dystroglycan (a component of an agrin receptor), and to myoblasts was tested. The presence of a four-amino acid insert at the y site is necessary and sufficient to confer heparin binding ability to agrin. Moreover, the binding of agrin to alpha-dystroglycan is inhibited by heparin when this insert is present. Agrin binding to the cell surface showed analogous properties: heparin inhibits the binding of only those agrin isoforms containing this four-amino acid insert. The results show that alternative splicing of agrin regulates its binding to heparin and suggest that agrin's interaction with alpha-dystroglycan may be modulated by cell surface glycosaminoglycans in an isoform-dependent manner.