Abstract Background Acute‐on‐chronic liver failure (ACLF) is a syndrome characterized by systemic inflammation with a high short-term mortality rate. Syndecan-1 (SDC-1) can independently predict the 90-day mortality of patients with septic shock. However, the role of SDC-1 in ACLF remains unknown. Methods In this study, serum SDC-1 levels were examined in 2 cohorts, which included 174 ACLF patients. And a mouse ACLF model induced by tetrachloride, lipopolysaccharide, and D-galactosamine was established, to evaluate the effects of sulodexide and heparan sulfate (side chains of SDC-1) on ACLF in vivo. Results Baseline serum SDC-1 levels in 101 ACLF patients (847.72, 499.79–1511.37 ng/ml) were significantly higher than in healthy controls (33.58, 27.08–43.34 ng/ml) (P < 0.0001). The baseline SDC-1 levels of patients who died or accepted a liver transplantation within 90 days were markedly higher than those of patients who survived (P < 0.05). A novel prognostic model (UIAS) based on upper gastrointestinal bleeding, INR, age, and SDC-1 was developed. The AUROC of the UIAS score for 28-day deterioration in ACLF patients was 0.884, indicating an obviously greater predictive performance for the outcomes of ACLF than those of the Child‐Pugh (AUROC = 0.646), MELD (AUROC = 0.713), and COSSH‐ACLF II scores (AUROC = 0.713). Moreover, we found that heparan sulfate and sulodexide could increase the expression of SDC-1 and attenuate liver injury, by promoting liver regeneration and inhibiting cell apoptosis through the activation of JAK1/STAT3 signalling. Conclusions Collectively, our findings suggest that SDC-1 represents a potential prognostic and therapeutic target for ACLF and should be further investigated.