Basic fibroblast growth factor (bFGF) binds to heparan sulfate proteoglycans at the cell surface and to receptors with tyrosine kinase activity. Prevention of binding between cell surface heparan sulfate and bFGF (i) substantially reduces binding of fibroblast growth factor to its cell-surface receptors, (ii) blocks the ability of bFGF to support the growth of Swiss 3T3 fibroblasts, and (iii) induces terminal differentiation of MM14 skeletal muscle cells, which is normally repressed by fibroblast growth factor. These results indicate that cell surface heparan sulfate is directly involved in bFGF cell signaling.