Heparanase is the sole mammalian endoglycosidase that cleaves heparan sulfate, the key polysaccharide of the extracellular matrix and basement membranes. Enzymatic cleavage of heparan sulfate profoundly affects a variety of physiological and pathological processes, including morphogenesis, neovascularization, inflammation, and tumorigenesis. Critical involvement of heparanase in colorectal tumor progression and metastatic spread is widely documented; however, until recently a role for heparanase in the initiation of colon carcinoma remained underappreciated. Interestingly, the emerging data that link heparanase to chronic inflammatory bowel conditions, also suggest contribution of the enzyme to colonic tumor initiation, at least in the setting of colitis-associated cancer. Highly coordinated interplay between intestinal heparanase and immune cells (i.e., macrophages) preserves chronic inflammatory conditions and creates a tumor-promoting microenvironment. Here we review the action of heparanase in colon tumorigenesis and discuss recent findings, pointing to a role for heparanase in sustaining immune cell-epithelial crosstalk that underlies intestinal inflammation and the associated cancer.