Proteoglycans participate in growth factor interaction with the cell surface through their heparan sulfate chains (HS), but it is not known if they are otherwise involved in growth factor signaling. It appears now that the syndecan-4 core protein, a transmembrane proteoglycan shown previously to bind phosphatidylinositol 4,5-bisphosphate (PIP₂) and activate PKCα, participates in mediating the effects of fibroblast growth factor (FGF)2 on cell function. Mutations in the cytoplasmic tail of syndecan-4 that either reduced its affinity to PIP₂ (PIP₂⁻) or disrupted its postsynaptic density 95, disk large, zona occludens-1 (PDZ)-dependent binding (PDZ⁻) produced a FGF2-specific dominant negative phenotype in endothelial cells as evidenced by the marked decline of their migration and proliferation rates and the impairment of their capacity to form tubes. In both cases, the molecular mechanism was determined to consist of a decrease in the syndecan-4–dependent activation of PKCα. This decrease was caused either by inhibition of FGF2-induced syndecan-4 dephosphorylation in the case of the PDZ⁻ mutation or by disruption of basolateral targeting of syndecan-4 and its associated PDZ-dependent complex in the case of the PIP₂⁻ mutation. These results suggest that PKCα activation and PDZ-mediated formation of a serine/threonine phosphatase-containing complex by syndecan-4 are downstream events of FGF2 signaling.