Chemokines interact with glycosaminoglycans (GAGs) at the cellular surface and to specific cell-surface receptors to activate signaling pathways. The GAG interaction allows the formation of a chemotactic gradient of chemokine required for cell haptotaxis and chemokine oligomerization. Poxviruses encode secreted chemokine-binding proteins with no sequence similarity to their cellular counterparts to modulate the host immune system. The E163 protein from ectromelia virus, the causative agent of mousepox, binds chemokines through their GAG-binding domain. In addition, E163 interacts with GAGs to be anchored at the cell surface, but its ability to interfere with chemokine-GAG interactions has not been demonstrated. We report the identification of the GAG-binding regions in E163 and the generation of mutant forms deficient of GAG binding. Chemokine binding assays show that some of the E163 GAG-binding sites are also involved in the interaction with chemokines. By using recombinant GAG-binding mutant forms we demonstrate that E163 prevents the interaction of chemokines with cell-surface GAGs, providing mechanisms for the immunomodulatory activity of the viral chemokine-binding protein E163.