Syndecans form a family of cell surface proteoglycans, which can interact with various effector molecules, such as extracellular matrix (ECM) molecules and growth factors. Syndecan-1 is the most extensively studied member of the syndecan family. It is found mainly in epithelial cells, but its expression is developmentally regulated during embryonic development. It has been shown to mediate cell adhesion to several ECM molecules, and to act as a coreceptor for fibroblast growth factors, potent angiogenic growth factors involved also in differentiation. Syndecan-1 expression is reduced during malignant transformation of various epithelia, and this loss correlates with the histological differentiation grade of squamous cell carcinomas, lacking from poorly differentiated tumours. In squamous cell carcinomas of the head and neck, positive syndecan-1 expression correlates with a more favourable prognosis. Recent experimental studies on the role of syndecan-1 in malignant transformation have shown that syndecan-1 expression is associated with the maintenance of epithelial morphology, anchorage-dependent growth and inhibition of invasiveness in vitro. This review will focus on the biological role of syndecan-1 in normal epithelial differentiation and malignant transformation.