Type 2 diabetes mellitus (T2DM) impairs hepatic clearance of atherogenic postprandial remnant lipoproteins. Our work and that of others have identified syndecan‐1 heparan sulfate proteoglycans (HSPGs) as remnant lipoprotein receptors. Nevertheless, defects in the T2DM liver have not been molecularly characterized, and neither has the correction that occurs upon caloric restriction. We used microarrays to compare expression of proteoglycan‐related genes in livers from control db/m mice; obese, T2DM db/db littermates fed ad libitum (AL); and db/db mice pair‐fed to match the intake of db/m mice. Surprisingly, the arrays identified only one gene whose dysregulation by T2DM would disrupt HSPG structure: the heparan sulfate glucosamine‐6‐O‐endosulfatase‐2 (Sulf2). SULF2 degrades HSPGs by removing 6‐O sulfate groups, but had no previously known role in diabetes or lipoprotein biology. Follow‐up quantitative polymerase chain reaction assays revealed a striking 11‐fold induction of Sulf2 messenger RNA in the livers of AL T2DM mice compared with controls. Immunoblots demonstrated induction of SULF2 in AL livers, with restoration toward normal in livers from pair‐fed db/db mice. Knockdown of SULF2 in cultured hepatocytes doubled HSPG‐mediated catabolism of model remnant lipoproteins. Notably, co‐immunoprecipitations revealed a persistent physical association of SULF2 with syndecan‐1. To identify mechanisms of SULF2 dysregulation in T2DM, we found that advanced glycosylation end products provoked a 10‐fold induction in SULF2 expression by cultured hepatocytes and an approximately 50% impairment in their catabolism of remnants and very low‐density lipoprotein, an effect that was entirely reversed by SULF2 knockdown. Adiponectin and insulin each suppressed SULF2 protein in cultured liver cells and in murine livers in vivo, consistent with a role in energy flux. Likewise, both hormones enhanced remnant lipoprotein catabolism in vitro. Conclusion: SULF2 is an unexpected suppressor of atherogenic lipoprotein clearance by hepatocytes and an attractive target for inhibition. (HEPATOLOGY 2010;.)