Heparan sulfate moieties of cell-surface proteoglycans modulate the biological responses to fibroblast growth factors (FGFs). We have reported previously that cell-associated heparan sulfates inhibit the binding of the keratinocyte growth factor (KGF), but enhance the binding of acidic FGF to the KGF receptor, both in keratinocytes, which naturally express this receptor, and in rat myoblasts, which ectopically express it (Reich-Slotky, R., Bonneh-Barkay, D., Shaoul, E., Berman, B., Svahn, C. M., and Ron, D. (1994) J. Biol. Chem. 269, 32279-32285). The proteoglycan bearing these modulatory heparan sulfates was purified to homogeneity from salt extracts of rat myoblasts by anion-exchange and FGF affinity chromatography and was identified as rat glypican. Affinity-purified glypican augmented the binding of acidic FGF and basic FGF to human FGF receptor-1 in a cell-free system. This effect was abolished following digestion of glypican by heparinase. Addition of purified soluble glypican effectively replaced heparin in supporting basic FGF-induced cellular proliferation of heparan sulfate-negative cells expressing recombinant FGF receptor-1. In keratinocytes, glypican strongly inhibited the mitogenic response to KGF while enhancing the response to acidic FGF. Taken together, these findings demonstrate that glypican plays an important role in regulating the biological activity of fibroblast growth factors and that, for different growth factors, glypican can either enhance or suppress cellular responsiveness.