Insulin-like growth factor (IGF)-I is a pleiotropic hormone that regulates vascular smooth muscle cell (VSMC) migration, proliferation, apoptosis, and differentiation. These actions are mediated by the IGF-I receptor. How activation of the same receptor by the same ligand leads to these diverse cellular responses is not well understood. Here we describe a novel mechanism specifying VSMC responses to IGF-I stimulation, distinctive for the pivotal roles of local IGF-binding proteins (IGFBPs). The role of local IGFBPs was indicated by comparing the activities of IGF-I and des-1-3-IGF-I, an IGF-I analog with reduced binding affinity to IGFBPs. Compared with IGF-I, des-1-3-IGF-I was more potent in stimulating DNA synthesis but much less potent in inducing directed migration of VSMCs. When the effects of individual IGFBPs were tested, IGFBP-2 and IGFBP-4 were found to inhibit IGF-I-stimulated DNA synthesis and migration. IGFBP-5 had an inhibitory effect on IGF-I-stimulated DNA synthesis, but it strongly potentiated IGF-I-induced VSMC migration. By using a non-IGF-binding IGFBP-5 mutant and an IGF-I-neutralizing antibody, it was demonstrated that IGFBP-5 also stimulates VSMC migration in an IGF-independent manner. This effect of IGFBP-5 was inhibited by soluble heparin and by treating cells with heparinase. Mutation of the heparin-binding motif of IGFBP-5 reduced its migration promoting activity. These findings suggest that local IGFBPs are important determinants of cellular responses to IGF-I stimulation, and a key player in this paradigm is IGFBP-5. IGFBP-5 not only modulates IGF-I actions, but it also stimulates cell migration by interacting with cell-surface heparan sulfate proteoglycans.