Small dermatan sulphate proteoglycan II from cultured human skin fibroblasts interacts with type I collagen in vitro and in vivo. When fibroblasts are maintained in a type I collagen lattice the proteoglycan remains exclusively within the lattice, and its association with fibrils can be demonstrated immunocytochemically. On the basis of [35S]sulphate incorporation, small proteoglycan II comprises about 80% of total proteoglycans secreted by cells in monolayer culture. In a collagen lattice, fibroblasts down-regulate its synthesis to the level of large chondroitin sulphate/dermatan sulphate and of heparan sulphate proteoglycans, the synthesis of which remains unaffected. Compared with the product from monolayer cultures, small proteoglycan II from collagen gels contained a longer polysaccharide chain which is characterized by a larger proportion of disulphated and a smaller proportion of monosulphated glucuronic acid-containing disaccharides. The half-life varied between 60 and 110 h. It is suggested that the compositional differences between the proteoglycan from monolayer cultures and from cells in a collagen lattice are related to the slower intracellular trafficking of the proteoglycan under the latter culture conditions.