Heparin-binding EGF-like growth factor (HB-EGF), but not EGF, binds to cell surface heparan sulfate proteoglycan (HSPG). This was demonstrated in (a) the binding of 125I-HB-EGF to mutant CHO cells deficient in HS production was diminished by 70% compared to wild-type CHO cells, (b) the binding of 125I-HB-EGF to CHO cells and bovine aortic smooth muscle cells (BASMC) was diminished 80% by heparitinase or chlorate treatment, and (c) 125I-EGF did not bind to CHO cells and its binding to BASMC was not diminished at all by heparitinase and only slightly by chlorate treatment. Accordingly, the role of HB-EGF interactions with HSPG in modulating bioactivity was examined. Heparitinase or chlorate treatment of BASMC diminished the ability of HB-EGF to stimulate BASMC migration by 60-80%. A similar inhibition of migration occurred when BASMC were treated with a synthetic peptide (P21) corresponding to the sequence of the putative heparin-binding domain of HB-EGF. As a control for BASMC viability, and for specificity, it was found that heparitinase and P21 did not inhibit at all and chlorate inhibited only slightly the stimulation of BASMC migration by PDGF AB. Since heparitinase, chlorate, and P21 treatment also diminished by 70-80% the cross-linking of 125I-HB-EGF to the EGF receptor, it was concluded that the interaction of HB-EGF, via its heparin-binding domain, with cell surface HSPG was essential for its optimal binding to the EGF receptor on BASMC and hence for its optimal ability to stimulate migration.