Fibroblast growth factor-18 (FGF-18) has been shown to regulate the growth plate chondrocyte proliferation, hypertrophy and cartilage vascularization necessary for endochondral ossification. The heparan sulfate proteoglycan perlecan is also critical for growth plate chondrocyte proliferation. FGF-18 null mice exhibit a skeletal dwarfism similar to that of perlecan null mice. Growth plate perlecan contains chondroitin sulfate (CS) and heparan sulfate (HS) chains and FGF-18 is known to bind to heparin and to heparan sulfate from some sources. We used cationic filtration and immunoprecipitation assays to investigate the binding of FGF-18 to perlecan purified from the growth plate and to recombinant perlecan domains expressed in COS-7 cells. FGF-18 bound to perlecan with a K(d) of 145 nM. Near saturation, approximately 103 molecules of FGF-18 bound per molecule of perlecan. At the lower concentrations used, FGF-18 bound with a K(d) of 27.8 nM. This binding was not significantly altered by chondroitinase nor heparitinase digestion of perlecan, but was substantially and significantly reduced by reduction and alkylation of the perlecan core protein. This indicates that the perlecan core protein (and not the CS nor HS chains) is involved in FGF-18 binding. FGF-18 bound equally to full-length perlecan purified from the growth plate and to recombinant domains I-III and III of perlecan. These data indicate that low affinity binding sites for FGF-18 are present in cysteine-rich regions of domain III of perlecan. FGF-18 stimulated 3H-thymidine incorporation in growth plate chondrocyte cultures derived from the lower and upper proliferating zones by 9- and 14-fold, respectively. The addition of perlecan reversed this increased incorporation in the lower proliferating chondrocytes by 74% and in the upper proliferating cells by 37%. These results suggest that perlecan can bind FGF-18 and alter the mitogenic effect of FGF-18 on growth plate chondrocytes.