Peptide AF-16, which includes the active site of Antisecretory Factor protein, has antisecretory and anti-inflammatory properties, making it a potent drug candidate for treatment of secretory and inflammatory diseases such as diarrhea, inflammatory bowel diseases, and intracranial hypertension. Despite remarkable physiological effects and great pharmaceutical need for drug discovery, very little is yet understood about AF-16 mechanism of action. In order to address interaction mechanisms, we investigated the binding of AF-16 to sulfated glycosaminoglycan, heparin, with focus on the effect of pH and ionic strength, and studied the influence of cell-surface proteoglycans on cellular uptake efficiency. Confocal laser scanning microscopy and flow cytometry experiments on wild type and proteoglycan-deficient Chinese hamster ovary cells reveal an endocytotic nature of AF-16 cellular uptake that is, however, less efficient for the cells lacking cell-surface proteoglycans. Isothermal titration calorimetry provides quantitative thermodynamic data and evidence for that the peptide affinity to heparin increases at lower pH and ionic strength. Experimental data, supported by theoretical modeling, of peptide-glycosaminoglycan interaction indicate that it has a large electrostatic contribution, which will be enhanced in diseases accompanied by decreased pH and ionic strength. These observations show that cell-surface proteoglycans are of general and crucial importance for the antisecretory and anti-inflammatory activities of AF-16.