Association of hepatic lipase (HL) with pure heparan sulfate proteoglycans (HSPG) has little effect on hydrolysis of high density lipoprotein (HDL) particles, but significantly inhibits (>80%) the hydrolysis of low (LDL) and very low density lipoproteins (VLDL). Lipolytic inhibition is associated with a differential ability of the lipoproteins to remove HL from the HSPG. LDL and VLDL are unable to displace HL, whereas HDL readily displaces HL from the HSPG. These data show that HSPG-bound HL is inactive. Purified apolipoprotein (apo) A-I is more efficient than HDL at liberating HL from HSPG, and HL displacement is associated with the direct binding of apoA-I to HSPG. However, displacement of HL by apoA-I does not enhance hydrolysis of VLDL particles. This appears due to the direct inhibition of HL by apoA-I. Both apoA-I and HDL are able to inhibit VLDL lipid hydrolysis by up to 60%. Inhibition of VLDL hydrolysis is associated with the binding of apoA-I to the surface of the VLDL particle and a concomitant decreased affinity for HL. These data show that apoA-I can regulate lipid hydrolysis by HL by liberating/activating the enzyme from cell surface proteoglycans and by directly modulating lipoprotein binding and hydrolysis.