Insulin-like growth factor binding protein-3 (IGFBP-3) purified from bovine serum shares 19 of 25 amino-terminal amino acid residues with IGFBP-3 purified from human, rat, and porcine sources. A newly characterized bovine fibroblast model was used to investigate the biological effects of purified bovine IGFBP-3 (bIGFBP-3). Coincubation of insulin-like growth factor I (IGF-I) with increasing concentrations of bIGFBP-3 produced a dose-dependent inhibition of IGF-I-stimulated [3H]aminoisobutyric acid (AIB) uptake in cultured bovine fibroblasts. Inhibition was complete at equimolar concentrations of IGF-I and bIGFBP-3. Inhibition of IGF-I-stimulated [3H]AIB uptake paralleled the ability of bIGFBP-3 to prevent [125I]IGF-I cell surface binding. In contrast, preincubation with bIGFBP-3 resulted in a dose-dependent enhancement of IGF-I-stimulated [3H]AIB uptake; a 32-86% increase in IGF-I bioactivity was seen after a 24 h preexposure to 10 nM bIGFBP-3, and a 2- to 6-fold potentiation was seen after a 72 h preincubation. Preincubation with bIGFBP-3 increased both the sensitivity and maximal responsiveness of the cells to IGF-I. The potentiating effects of bIGFBP-3 were associated with increased [125I]IGF-I binding to cultured bovine fibroblasts. Affinity cross-linking experiments indicated that the increase in IGF-I binding was due to increased membrane-associated bIGFBP-3 rather than to a bIGFBP-3-induced increase in type I IGF receptors. bIGFBP-3 had no effect on insulin stimulation of [3H]AIB uptake under either experimental condition. These data suggest that soluble bIGFBP-3 inhibits IGF-I action by sequestering and preventing IGF-I receptor binding, whereas surface-associated bIGFBP-3 enhances the growth-promoting effects of IGF-I in bovine fibroblasts. We propose that IGFBP-3 serves a dual function in modulating IGF action in vivo.