The structure and function of cytosolic Ca(2+)-binding proteins containing EF-hands are well understood. Recently, the presence of EF-hands in an extracellular protein was for the first time proven by the structure determination of the EC domain of BM-40 (SPARC (for secreted protein acidic and rich in cysteine)/osteonectin) (Hohenester, E., Maurer, P., Hohenadl, C., Timpl, R., Jansonius, J. N., and Engel, J. (1996) Nat. Struct. Biol. 3, 67-73). The structure revealed a pair of EF-hands with two bound Ca(2+) ions. Two unusual features were noted that distinguish the extracellular EF-hands of BM-40 from their cytosolic counterparts. An insertion of one amino acid into the loop of the first EF-hand causes a variant Ca(2+) coordination, and a disulfide bond connects the helices of the second EF-hand. Here we show that the extracellular EF-hands in the BM-40 EC domain bind Ca(2+) cooperatively and with high affinity. The EC domain is thus in the Ca(2+)-saturated form in the extracellular matrix, and the EF-hands play a structural rather than a regulatory role. Deletion mutants demonstrate a strong interaction between the EC domain and the neighboring FS domain, which contributes about 10 kJ/mol to the free energy of binding and influences cooperativity. This interaction is mainly between the FS domain and the variant EF-hand 1. Certain mutations of Ca(2+)-coordinating residues changed affinity and cooperativity, but others inhibited folding and secretion of the EC domain in a mammalian cell line. This points to a function of EF-hands in extracellular proteins during biosynthesis and processing in the endoplasmic reticulum or Golgi apparatus.