We have previously demonstrated intracellular degradation of the heparan sulfate side chains in recycling glypican-1 by heparanase and by deaminative cleavage at N-unsubstituted glucosamine with nitric oxide derived from intrinsic nitrosothiols (see Ding, K., Mani, K., Cheng, F., Belting, M. and Fransson, L.-A. (2002) J. Biol. Chem. 277, 33353-33360). To determine where and in what order events take place, we have visualized, by using confocal laser-scanning immunofluorescence microscopy, glypican-1 variants in unperturbed cells or arrested at various stages of processing. In unperturbed proliferating cells, glypican-1 was partly S-nitrosylated. Intracellular glypican-1 was enriched in endosomes, colocalized significantly with GM-1 ganglioside, caveolin-1, and Rab9-positive endosomes, and carried side chains rich in N-unsubstituted glucosamine residues. However, such residues were scarce in cell surface glypican-1. Brefeldin A-arrested glypican-1, which was non-S-nitrosylated and carried side chains rich in N-unsubstituted glucosamines, colocalized extensively with caveolin-1 but not with Rab9. Suramin, which inhibits heparanase, induced the appearance of S-nitrosylated glypican-1 in caveolin-1-rich compartments. Inhibition of deaminative cleavage did not prevent heparanase from generating heparan sulfate oligosaccharides that colocalized strongly with caveolin-1. Growth-quiescent cells displayed extensive NO-dependent deaminative cleavage of heparan sulfate-generating anhydromannose-terminating fragments that were partly associated with acidic vesicles. Proliferating cells generated such fragments during polyamine uptake. We conclude that recycling glypican-1 that is associated with caveolin-1-containing endosomes undergoes sequential N-desulfation/N-deacetylation, heparanase cleavage, S-nitrosylation, NO release, and deaminative cleavage of its side chains in conjunction with polyamine uptake.