While the pro-tumorigenic properties of the ECM-degrading heparanase enzyme are well documented, the role of its close homolog, heparanase 2 (Hpa2), in cancer is largely unknown. We examined the role of Hpa2 in pancreatic cancer, a malignancy characterized by a dense fibrotic ECM associated with poor response to treatment and bad prognosis. We show that pancreatic ductal adenocarcinoma (PDAC) patients that exhibit high levels of Hpa2 survive longer than patients with low levels of Hpa2. Strikingly, overexpression of Hpa2 in pancreatic carcinoma cells resulted in a most prominent decrease in the growth of tumors implanted orthotopically and intraperitoneally, whereas Hpa2 silencing resulted in bigger tumors. We further found that Hpa2 enhances endoplasmic reticulum (ER) stress response and renders cells more sensitive to external stress, associating with increased apoptosis. Interestingly, we observed that ER stress induces the expression of Hpa2, thus establishing a feedback loop by which Hpa2 enhances ER stress that, in turn, induces Hpa2 expression. This leads to increased apoptosis and attenuated tumor growth. Altogether, Hpa2 emerges as a powerful tumor suppressor in pancreatic cancer.