We recently established that the elastin-binding protein, which is identical to the spliced variant of beta-galactosidase, forms a cell surface-targeted complex with two proteins considered "classic lysosomal enzymes": protective protein/cathepsin A and neuraminidase-1 (Neu1). We also found that cell surface-residing Neu1 can desialylate neighboring microfibrillar glycoproteins and facilitate the deposition of insoluble elastin, which contributes to the maintenance of cellular quiescence. Here we provide evidence that cell surface-residing Neu1 contributes to a novel mechanism that limits cellular proliferation by desialylating cell membrane-residing sialoglycoproteins that directly propagate mitogenic signals. We demonstrated that treatment of cultured human aortic smooth muscle cells (SMCs) with either a sialidase inhibitor or an antibody that blocks Neu1 activity induced significant up-regulation in SMC proliferation in response to fetal bovine serum. Conversely, treatment with Clostridium perfringens neuraminidase (which is highly homologous to Neu1) decreased SMC proliferation, even in cultures that did not deposit elastin. Further, we found that pretreatment of aortic SMCs with exogenous neuraminidase abolished their mitogenic responses to recombinant platelet-derived growth factor (PDGF)-BB and insulin-like growth factor (IGF)-2 and that sialidosis fibroblasts (which are exclusively deficient in Neu1) were more responsive to PDGF-BB and IGF-2 compared with normal fibroblasts. Furthermore, we provide direct evidence that neuraminidase caused the desialylation of both PDGF and IGF-1 receptors and diminished the intracellular signals induced by the mitogenic ligands PDGF-BB and IGF-2.