Exit of recycling cholesterol from late endosomes is defective in Niemann–Pick C1 (NPC1) and Niemann–Pick C2 (NPC2) diseases. The traffic route of the recycling proteoglycan glypican-1 (Gpc-1) may also involve late endosomes and could thus be affected in these diseases. During recycling through intracellular compartments, the heparan sulfate (HS) side chains of Gpc-1 are deaminatively degraded by nitric oxide (NO) derived from preformed S-nitroso groups in the core protein. We have now investigated whether this NO-dependent Gpc-1 autoprocessing is active in fibroblasts from NPC1 disease. The results showed that Gpc-1 autoprocessing was defective in these cells and, furthermore, greatly depressed in normal fibroblasts treated with U18666A (3-β-[2-(diethylamino)ethoxy]androst-5-en-17-one), a compound widely used to induce cholesterol accumulation. In both cases, autoprocessing was partially restored by treatment with ascorbate which induced NO release, resulting in deaminative cleavage of HS. However, when NO-dependent Gpc-1 autoprocessing is depressed and heparanase-catalyzed degradation of HS remains active, a truncated Gpc-1 with shorter HS chains would prevail, resulting in fewer NO-sensitive sites/proteoglycan. Therefore, addition of ascorbate to cells with depressed autoprocessing resulted in nitration of tyrosines. Nitration was diminished when heparanase was inhibited with suramin or when Gpc-1 expression was silenced by RNAi. Gpc-1 misprocessing in NPC1 cells could thus contribute to neurodegeneration mediated by reactive nitrogen species.