Pro-lysyl oxidase is secreted as a 50-kDa proenzyme and is then cleaved to a 30-kDa mature enzyme (lysyl oxidase (LOX)) and an 18-kDa propeptide (lysyl oxidase propeptide (LOX-PP)). The presence of LOX-PP in the cell layers of phenotypically normal osteoblast cultures led us to investigate the effects of LOX-PP on osteoblast differentiation. Data indicate that LOX-PP inhibits terminal mineralization in primary calvaria osteoblast cultures when added at early stages of differentiation, with no effects seen when present at later stages. LOX-PP was found to inhibit serum- and FGF-2-stimulated DNA synthesis and FGF-2-stimulated cell growth. Enzyme-linked immunosorbent assay and Western blot analyses show that LOX-PP inhibits FGF-2-induced ERK1/2 phosphorylation, signaling events that mediate the FGF-2-induced proliferative response. LOX-PP inhibits FGF-2-stimulated phosphorylation of FRS2alpha and FGF-2-stimulated DNA synthesis, even after inhibition of sulfation of heparan sulfate proteoglycans. These data point to a LOX-PP target at or near the level of fibroblast growth factor receptor binding or activation. Ligand binding assays on osteoblast cell layers with (125)I-FGF-2 demonstrate a concentration-dependent inhibition of FGF-2 binding to osteoblasts by LOX-PP. In vitro binding assays with recombinant fibroblast growth factor receptor protein revealed that LOX-PP inhibits FGF-2 binding in an uncompetitive manner. We propose a working model for the respective roles of LOX enzyme and LOX-PP in osteoblast phenotype development in which LOX-PP may act to inhibit the proliferative response possibly to allow cells to exit from the cell cycle and progress to the next stages of differentiation.