Heparanase and VEGF are related closely to angiogenesis in cancer. The purpose of our study was to evaluate the expression and correlation of heparanase and VEGF in hypoxia-induced retinal neovascularization. C57BL/6 oxygen-induced retinopathy (OIR) mice and human retinal microvascular endothelial cells (HRECs) were treated with the hypoxia mimetic agent cobalt chloride (CoCl₂), and in the presence of the heparanase inhibitor phosphomannopentaose sulfate (Muparfostat, PI-88). Heparanase activity was assayed in HRECs, and the expression of heparanase, VEGF protein and mRNA were evaluated by immunofluorescence, ELISA, Western blot, and real-time PCR while retinal flat mounts were used to evaluate the area of neovascularization of mice retina. HREC heparanase activity was increased by treatment with CoCl₂, but was decreased by PI-88. Immunofluorescence showed that heparanase and VEGF staining was intense in hypoxia-treated HRECs and OIR mice retina, while VEGF staining was faint in the normoxia and PI-88-treated ones. Western blot and real-time PCR results indicated that the expression of heparanase and VEGF was increased under hypoxic conditions, and the increase of VEGF was inhibited by PI-88. Retinal flat mounts showed that the area of new vessels in retina of OIR mice was increased compared to the normoxic mice, and this effect was inhibited by PI-88. Heparanase is upregulated and associated with the VEGF expression in hypoxia-induced retinal diseases. Heparanase is involved in hypoxia-induced neovascularization through promoting VEGF expression and may be a new therapeutic target for hypoxia-induced neovascularization retinal diseases.