Fibroblast growth factors FGF‐1 (aFGF) and FGF‐2 (bFGF) are found in most embryonic and adult normal and tumor tissues, where they are immobilized in the extracellular matrix (ECM). Mobilization of these FGFs is part of a tightly controlled process resulting in the activation of high‐affinity FGF receptors. Recently, we have shown that a secreted FGF‐binding protein (FGF‐BP) binds non‐covalently to FGF‐2 and is able to release it from the ECM. This process of growth factor bioactivation seems to play a pivotal role in the growth of squamous cell carcinomas, especially through induction of tumor angiogenesis. Since previous studies provided only indirect evidence for the proposed mechanism of FGF‐BP‐mediated FGF‐2 release, we decided to use recombinant purified FGF‐BP to study further the underlying mechanism of FGF‐BP action. Here we show that FGF‐BP is able to bind directly to FGF‐2 without additional cofactors and to exhibit bioactivity. The purified recombinant FGF‐BP stimulates tumor cell growth as well as endothelial cell growth and chemotaxis, indicating a dual growth‐supporting role of FGF‐BP in tumors. We show that this paracrine FGF‐BP effect is dependent on endogenously expressed FGF‐2, since it can be completely blocked by anti‐FGF‐2 antibodies. In tumor xenografts and in tumor cells, we detected a pattern of specific FGF‐BP‐immunoreactive high molecular weight forms, which presumably represent stable covalent complexes of FGF‐BP and show marked differences in their occurrence in different tumors and in their heparin binding affinity. By providing further insight into the mechanism of FGF‐BP action, our results emphasize the relevance of FGF‐BP and of FGF‐2 in tumor growth. © 2001 Wiley‐Liss, Inc.