The cell-surface heparan sulfate proteoglycan syndecan-4 acts in conjunction with the alpha(5)beta(1) integrin to promote the formation of actin stress fibers and focal adhesions in fibronectin (FN)-adherent cells. Fibroblasts seeded onto the cell-binding domain (CBD) fragment of FN attach but do not fully spread or form focal adhesions. Activation of Rho, with lysophosphatidic acid (LPA), or protein kinase C, using the phorbol ester phorbol 12-myristate 13-acetate, or clustering of syndecan-4 with antibodies directed against its extracellular domain will stimulate formation of focal adhesions and stress fibers in CBD-adherent fibroblasts. The distinct morphological differences between the cells adherent to the CBD and to full-length FN suggest that syndecan-4 may influence the organization of the focal adhesion or the activation state of the proteins that comprise it. FN-null fibroblasts (which express syndecan-4) exhibit reduced phosphorylation of focal adhesion kinase (FAK) tyrosine 397 (Tyr(397)) when adherent to CBD compared with FN-adherent cells. Treating the CBD-adherent fibroblasts with LPA, to activate Rho, or the tyrosine phosphatase inhibitor sodium vanadate increased the level of phosphorylation of Tyr(397) to match that of cells plated on FN. Treatment of the fibroblasts with PMA did not elicit such an effect. To confirm that this regulatory pathway includes syndecan-4 specifically, we examined fibroblasts derived from syndecan-4-null mice. The phosphorylation levels of FAK Tyr(397) were lower in FN-adherent syndecan-4-null fibroblasts compared with syndecan-4-wild type and these levels were rescued by the addition of LPA or re-expression of syndecan-4. These data indicate that syndecan-4 ligation regulates the phosphorylation of FAK Tyr(397) and that this mechanism is dependent on Rho but not protein kinase C activation. In addition, the data suggest that this pathway includes the negative regulation of a protein-tyrosine phosphatase. Our results implicate syndecan-4 activation in a direct role in focal adhesion regulation.