Polyethylene glycol modification (PEGylation) can enhance the pharmacokinetic properties of therapeutic proteins by the attachment of polyethylene glycol (PEG) to the surface of a protein to shield the protein surface from proteolytic degradation and limit aggregation. However, current PEGylation strategies often reduce biological activity, potentially as a result of steric hindrance of PEG. Overall, there are no structure‐based guidelines for selection of conjugate sites that retain optimal biological activity with improved pharmacokinetic properties. In this study, site‐specific PEGylation based on the FGF2‐FGFR1‐heparin complex structure is performed. The effects of the conjugate sites on protein function are investigated by measuring the receptor/heparin binding affinities of the modified proteins and performing assays to measure cell‐based bio‐activity and in vivo stability. Comprehensive analysis of these data demonstrates that PEGylation of FGF2 that avoids the binding sites for fibroblast growth factor receptor 1 (FGFR1) and heparin provides optimal pharmacokinetic enhancement with minimal losses to biological activity. Animal experiments demonstrate that PEGylated FGF2 exhibits greater efficacy in protecting against traumatic brain injury‐induced brain damage and neurological functions than the non‐modified FGF2. This rational structure‐based PEGylation strategy for protein modification is expected to have a major impact in the area of protein‐based therapeutics.