The proinflammatory cytokine IFN-γ, which is chronically elevated in multiple sclerosis, induces pathologic quiescence in human oligodendrocyte progenitor cells (OPCs) via upregulation of the transcription factor PRRX1. In this study using animals of both sexes, we investigated the role of heparan sulfate proteoglycans in the modulation of IFN-γ signaling following demyelination. We found that IFN-γ profoundly impaired OPC proliferation and recruitment following adult spinal cord demyelination. IFN-γ-induced quiescence was mediated by direct signaling in OPCs as conditional genetic ablation ofIFNγR1(Ifngr1) in adult NG2+OPCs completely abrogated these inhibitory effects. Intriguingly, OPC-specific IFN-γ signaling contributed to failed oligodendrocyte differentiation, which was associated with hyperactive Wnt/Bmp target gene expression in OPCs. We found that PI-88, a heparan sulfate mimetic, directly antagonized IFN-γ to rescue human OPC proliferation and differentiationin vitroand blocked the IFN-γ-mediated inhibitory effects on OPC recruitmentin vivo. Importantly, heparanase modulation by PI-88 or OGT2155 in demyelinated lesions rescued IFN-γ-mediated axonal damage and demyelination. In addition to OPC-specific effects, IFN-γ-augmented lesions were characterized by increased size, reactive astrogliosis, and proinflammatory microglial/macrophage activation along with exacerbated axonal injury and cell death. Heparanase inhibitor treatment rescued many of the negative IFN-γ-induced sequelae suggesting a profound modulation of the lesion environment. Together, these results suggest that the modulation of the heparanome represents a rational approach to mitigate the negative effects of proinflammatory signaling and rescuing pathologic quiescence in the inflamed and demyelinated human brain.SIGNIFICANCE STATEMENTThe failure of remyelination in multiple sclerosis contributes to neurologic dysfunction and neurodegeneration. The activation and proliferation of oligodendrocyte progenitor cells (OPCs) is a necessary step in the recruitment phase of remyelination. Here, we show that the proinflammatory cytokine interferon-γ directly acts on OPCs to induce pathologic quiescence and thereby limit recruitment following demyelination. Heparan sulfate is a highly structured sulfated carbohydrate polymer that is present on the cell surface and regulates several aspects of the signaling microenvironment. We find that pathologic interferon-γ can be blocked by modulation of the heparanome following demyelination using either a heparan mimetic or by treatment with heparanase inhibitor. These studies establish the potential for modulation of heparanome as a regenerative approach in demyelinating disease.