The methylation of histones is a fundamental epigenetic process regulating gene expression programs in mammalian cells. Dysregulated patterns of histone methylation are directly implicated in malignant transformation. Here, we report the unexpected finding that the invasive extracellular matrix degrading endoglycosidase heparanase enters the nucleus of activated human T lymphocytes and regulates the transcription of a cohort of inducible immune response genes by controlling histone H3 methylation patterns. It was found that nuclear heparanase preferentially associates with euchromatin. Genome-wide ChIP-on-chip analyses showed that heparanase is recruited to both the promoter and transcribed regions of a distinct cohort of transcriptionally active genes. Knockdown and overexpression of the heparanase gene also showed that chromatin-bound heparanase is a prerequisite for the transcription of a subset of inducible immune response genes in activated T cells. Furthermore, the actions of heparanase seem to influence gene transcription by associating with the demethylase LSD1, preventing recruitment of the methylase MLL and thereby modifying histone H3 methylation patterns. These data indicate that heparanase belongs to an emerging class of proteins that play an important role in regulating transcription in addition to their well-recognized extra-nuclear functions.