Transglutaminase 2 (TG2) is a multifunctional protein that is primarily engaged in cell adhesion/signaling or shows Ca2+-dependent transglutaminase activity in the extracellular space of tissues. This latter action leads to the cross-linking of the extracellular matrix (ECM) proteins. The enhanced extracellular expression of TG2 is associated with processes such as wound healing, fibrosis or vascular remodeling that are also characterized by a high deposition of dermatan sulfate (DS) proteoglycans in the ECM. However, it is unknown whether DS may bind to TG2 or affect its function. Using the plasmon surface resonance method, we showed that DS chains, especially those of biglycan, are good binding partners for TG2. The interaction has some requirements as to the DS structure. The competitive effect of heparin on DS binding to TG2 suggests that both glycosaminoglycans occupy the same binding site(s) on the protein molecule. An occurrence of the DS-TG2 interaction was confirmed by the co-immunoprecipitation of this protein with native decorin that is a DS-bearing proteoglycan rather than with the decorin core protein. Moreover, in vivo DS is responsible for both TG2 binding and the regulation of the location of this protein in the ECM as can be suggested from an increased extraction of TG2 from the human fascia only when an enzymatic degradation of the tissue DS was conducted in the presence of the anti-collagen type I antiserum. In addition, DS with a low affinity for TG2 exerted an inhibitory effect on the protein transamidating activity most probably via the control of the accessibility of a substrate. Our data show that DS can affect several aspects of TG2 biology in both physiological and pathological conditions.