Dipeptidyl peptidase IV (DPP IV) is a cell surface glycoprotein which has been implicated in hepatocyte-extracellular matrix interactions [Hixson, DeLourdes, Ponce, Allison & Walborg (1984) Exp. Cell Res. 152, 402-414; Walborg, Tsuchida, Weeden, Thomas, Barrick, McEntire, Allison & Hixson (1985) Exp. Cell Res. 158, 509-518; Hanski, Huhle & Reutter (1985) Biol. Chem. Hoppe-Seyler 366, 1169-1176]. However, its proteolytic substrate(s) and/or binding protein(s) which mediate this influence have not been conclusively identified. Nitrocellulose binding assays using 125I-labelled DPP IV that was purified to homogeneity from rat hepatocytes revealed a direct interaction of DPP IV with fibronectin. Although fibronectin could mediate an indirect binding of DPP IV to collagen, no evidence was found for a direct binding of DPP IV to native or denatured Type I collagen. Fibronectin appeared to bind DPP IV at a site distinct from its exopeptidase substrate recognition site since protease inhibitors such as competitive peptide substrates and phenylmethanesulphonyl fluoride enhanced binding, possibly as a result of an altered conformation of DPP IV. To determine if fibronectin binding to DPP IV is involved in the interaction of fibronectin with the hepatocyte surface, the effect of various DPP IV inhibitors on 125I-fibronectin binding to isolated hepatocytes in suspension was examined. Kinetic studies revealed that inhibitors of DPP IV which enhanced fibronectin binding in vitro accelerated the initial binding of fibronectin to the cell surface where it was subsequently cross-linked (presumably by tissue transglutaminase) to as yet undefined components. Immunolocalization of fibronectin and DPP IV in normal rat liver sections showed that both proteins were present along the hepatocyte sinusoidal membrane. These observations, coupled with previous results showing that DPP IV is tightly bound to biomatrix isolated from rat liver (Hixson et al., 1984; Walborg et al., 1985), suggest that DPP IV binding to fibronectin may play a role in interactions of hepatocytes with extracellular matrix in vivo and possibly in matrix assembly.