Recently we have reported that biglycan (BGN) promotes osteoblast differentiation and that this function is due in part to its ability to positively modulate bone morphogenetic protein (BMP) functions. In this study we investigated the role of glycosaminoglycans (GAGs) of BGN in this function using in vitro and in vivo models. C2C12 myogenic cells were treated or untreated with BMP-2 alone or in combination with glycanated, partially glycanated or de-glycanated BGN, and the effects on BMP signaling and function were assessed by Smad1/5/8 phosphorylation and alkaline phosphatase (ALP) activity. Furthermore, the effect of de-glycanation of BGN on BMP-2 induced osteogenesis was investigated employing a rat mandible defect model. The defects were filled with collagen scaffolds loaded with glycanated, partially glycanated or de-glycanated BGN alone or in combination with a sub-optimal dose of BMP-2 (subBMP). In in vitro experiments, BMP signaling and function were the greatest when BMP-2 was combined with de-glycanated BGN among the groups tested. In the rat mandible experiments, μCT analyses revealed that the newly formed bone was significantly increased only when subBMP was combined with de-glycanated BGN. The data indicate that the GAG component of BGN functions as a suppressor for the BGN-assisted BMP function.