The serine peptidase neurotrypsin is stored in presynaptic nerve endings and secreted in an inactive zymogenic form by synaptic activity. After activation, which requires activity of postsynaptic NMDA (N-methyl-D-aspartate) receptors, neurotrypsin cleaves the heparan sulfate proteoglycan agrin at active synapses. The resulting C-terminal 22-kDa fragment of agrin induces dendritic filopodia, which are considered to be precursors of new synapses. In the present study, we investigated the role of GAGs (glycosaminoglycans) in the activation of neurotrypsin and neurotrypsin-dependent agrin cleavage. We found binding of neurotrypsin to the GAG side chains of agrin, which in turn enhanced the activation of neurotrypsin by proprotein convertases and resulted in enhanced agrin cleavage. A similar enhancement of neurotrypsin binding to agrin, neurotrypsin activation and agrin cleavage was induced by the four-amino-acid insert at the y splice site of agrin, which is crucial for the formation of a heparin-binding site. Non-agrin GAGs also contributed to binding and activation of neurotrypsin and, thereby, to agrin cleavage, albeit to a lesser extent. Binding of neurotrypsin to cell-surface glycans locally restricts its conversion from zymogen into active peptidase. This provides the molecular foundation for the local action of neurotrypsin at or in the vicinity of its site of synaptic secretion. By its local action at synapses with correlated pre- and post-synaptic activity, the neurotrypsin–agrin system fulfils the requirements for a mechanism serving experience-dependent modification of activated synapses, which is essential for adaptive structural reorganizations of neuronal circuits in the developing and/or adult brain.