Perlecan, a widespread heparan sulfate proteoglycan, functions as a bioactive reservoir for growth factors by stabilizing them against misfolding or proteolysis. These factors, chiefly members of the fibroblast growth factor (FGF) gene family, are coupled to the N-terminal heparan sulfate chains, which augment high affinity binding and receptor activation. However, rather little is known about biological partners of the protein core. The major goal of this study was to identify novel proteins that interact with the protein core of perlecan. Using the yeast two-hybrid system and domain III of perlecan as bait, we screened approximately 0.5 10(6) cDNA clones from a keratinocyte library and identified a strongly interactive clone. This cDNA corresponded to FGF-binding protein (FGF-BP), a secreted protein previously shown to bind acidic and basic FGF and to modulate their activities. Using a panel of deletion mutants, FGF-BP binding was localized to the second EGF repeat of domain III, a region very close to the binding site for FGF7. FGF-BP could be coimmunoprecipitated with an antibody against perlecan and bound in solution to recombinant domain III-alkaline phosphatase fusion protein. Immunohistochemical analyses revealed colocalization of FGF-BP and perlecan in the pericellular stroma of various squamous cell carcinomas suggesting a potential in vivo interaction. Thus, FGF-BP should be considered a novel biological ligand for perlecan, an interaction that could influence cancer growth and tissue remodeling.