Background To determine the diagnostic and prognostic capability of urinary and tumoral syndecan-1 (SDC-1) levels in patients with cancer of the urinary bladder. Methods SDC-1 levels were quantitated by enzyme-linked immunosorbent assay (ELISA) in 308 subjects (102 cancer subjects and 206 non-cancer subjects) to assess its diagnostic capabilities in voided urine. The performance of SDC-1 was evaluated using the area under the curve of a receiver operating characteristic curve. In addition, immunohistochemical (IHC) staining assessed SDC-1 protein expression in 193 bladder specimens (185 cancer subjects and 8 non-cancer subjects). Outcomes were correlated to SDC-1 levels. Results Mean urinary levels of SDC-1 did not differ between the cancer subjects and the non-cancer subjects, however, the mean urinary levels of SDC-1 were reduced in high-grade compared to low-grade disease (p < 0.0001), and in muscle invasive bladder cancer (MIBC) compared to non-muscle invasive bladder cancer (NMIBC) (p = 0.005). Correspondingly, preliminary data note a shift from a membranous cellular localization of SDC-1 in normal tissue, low-grade tumors and NMIBC, to a distinctly cytoplasmic localization in high-grade tumors and MIBC was observed in tissue specimens. Conclusion Alone urinary SDC-1 may not be a diagnostic biomarker for bladder cancer, but its urinary levels and cellular localization were associated with the differentiation status of patients with bladder tumors. Further studies are warranted to define the potential role for SDC-1 in bladder cancer progression.