The beta-site APP cleaving enzyme (BACE1) is responsible for the first step in the production of the beta-amyloid protein of Alzheimer's disease. BACE1 is synthesized as a partially active zymogen (proBACE1). We previously showed that the glycosaminoglycan (GAG) heparin can increase the enzyme activity of proBACE1. In this study, the structural requirements and the mechanism for the GAG-induced activation were examined. The effect of heparin on proBACE1 was influenced by the degree of sulfation and carboxylation of the GAG, as well as by the length of the sugar. Although low molecular weight heparin fragments did not strongly stimulate proBACE1, they inhibited heparin-induced activation of the enzyme. The structure of the zymogen was modeled using the known X-ray structures of the BACE1 catalytic domain and the homologous prodomain of porcine pepsinogen. The modeled structure suggested that a heparin-binding domain may reside close to the prodomain, and that movement of a loop region between residues 46-65, lying adjacent to the prodomain, may be needed to accommodate heparin binding. The presence of the loop domain adjacent to the active site may account for the lower activity of the zymogen relative to the mature enzyme. Movement of the loop region upon heparin binding could expose the active site region to allow for increased substrate binding. The results suggest a model in which conformational changes close to the prodomain may be involved in the mechanism of heparin-induced activation of proBACE1.