We investigated the mitogenic effects of heparin-binding epidermal growth factor-like growth factor (HB-EGF) in vascular smooth muscle cells (SMCs) obtained from rats with streptozotocin (STZ)-induced diabetes and evaluated the role of heparan sulfate proteoglycan (HSPG) in inducing these effects. HB-EGF significantly increased DNA synthesis in the SMCs of diabetic rats (STZ-SMCs) compared with control rats (control SMCs). However, the mitogenic effects of EGF, which shares EGF receptors with HB-EGF, and basic fibroblast growth factor, another heparin-binding growth factor, were similar in STZ-SMCs and control SMCs. The mitogenic response to HB-EGF in SMCs of insulin-treated diabetic rats was similar to the response in control SMCs. HB-EGF-induced autophosphorylation of EGF receptors was increased in STZ-SMCs compared with control SMCs, although the number of EGF receptors in STZ-SMCs was 40% of that in controls. This increased mitogenic response to HB-EGF in STZ-SMCs was completely inhibited by treatment with heparitinase, chlorate, and a synthetic peptide corresponding to the heparin-binding domain of HB-EGF. Compared with heparan sulfate isolated from control SMCs, heparan sulfate isolated from STZ-SMCs was of smaller molecular size and caused a greater mitogenic effect of HB-EGF. These findings suggest that the mitogenic response to HB-EGF is increased in SMCs of diabetic rats. Changes in cell-associated heparan sulfate in STZ-SMCs may be related to the increased mitogenic response to HB-EGF.