Transforming growth factors beta 1 and beta 2 bind with high affinity to the core protein of a 250-350-kD cell surface proteoglycan. This proteoglycan (formerly referred to as the type III TGF-beta receptor) coexists in many cells with the receptor implicated in TGF-beta signal transduction (type I TGF-beta receptor), but its function is not known. We report here that soluble TGF-beta-binding proteoglycans are released by several cell types into the culture media, and can be found in serum and extracellular matrices. As has been shown for the membrane-bound form, the soluble proteoglycans have a heterogeneous core protein of 100-120 kD that carries chondroitin sulfate and/or heparan sulfate glycosaminoglycan chains and a small amount of N-linked carbohydrate. The membrane-bound form of this proteoglycan is hydrophobic and associates with liposomes, whereas the soluble forms lack a membrane anchor and do not associate with liposomes. Differences in the electrophoretic migration of the soluble and membrane forms of this proteoglycan suggest additional structural differences in their core proteins and glycosaminoglycan chains. These soluble and membrane-bound proteoglycans, for which we propose the name "betaglycans," might play distinct roles in pericellular retention, delivery, or clearance of activated TGF-beta.