Using a radioligand binding assay we have demonstrated that phosphacan, a chondroitin sulfate proteoglycan of nervous tissue that also represents the extracellular domain of a receptor-type protein tyrosine phosphatase, shows saturable, reversible, high-affinity binding (K d ϳ6 nM) to fibroblast growth factor-2 (FGF-2). Binding was reduced by only ϳ35% following chondroitinase treatment of the proteoglycan, indicating that the interaction is mediated primarily through the core protein rather than the glycosaminoglycan chains. Immunocytochemical studies also showed an overlapping localization of FGF-2 and phosphacan in the developing central nervous system. At concentrations of 10 g protein/ml, both native phosphacan and the core protein obtained by chondroitinase treatment potentiated the mitogenic effect of FGF-2 (5 ng/ml) on NIH/3T3 cells by 75-90%, which is nearly the same potentiation as that produced by heparin at an equivalent concentration. Although studies on the role of proteoglycans in mediating the binding and mitogenic effects of FGF-2 have previously focused on cell surface heparan sulfate, our results indicate that the core protein of a chondroitin sulfate proteoglycan may also regulate the access of FGF-2 to cell surface signaling receptors in nervous tissue.Phosphacan and neurocan are nervous tissue-specific chondroitin sulfate proteoglycans that are high-affinity ligands of several immunoglobulin superfamily neural cell adhesion molecules and of the extracellular matrix proteins tenascin-C and tenascin-R (1-3). These interactions are variously mediated by the chondroitin sulfate chains, N-linked oligosaccharides present on the core glycoproteins, or by other structural features of the proteoglycans that have not yet been specifically identified. Phosphacan and neurocan both bind to neurons and have potent inhibitory effects on cell adhesion and neurite outgrowth, although in certain experimental situations phosphacan may also stimulate neurite growth. Neurocan is synthesized by neurons and is a member of the family of hyaluronan-binding chondroitin sulfate proteoglycans that also includes aggrecan, versican, and brevican, whereas phosphacan, which is produced by astrocytes, is an alternative splicing product representing the extracellular domain of a receptor-type protein tyrosine phosphatase. Phosphacan is also a ligand of the neural differentiation factor HB-GAM 1 (heparin-binding growth-associated molecule)/pleiotrophin (3, 4), and both neurocan and phosphacan bind with high affinity to HB-GAM and to the related differentiation factor amphoterin, with which they colocalize in nervous tissue (3). The interactions with HB-GAM and amphoterin are largely mediated by the chondroitin sulfate chains of the proteoglycans.