Bone contains various growth factors, including fibroblast growth factor (FGF). The cellular origins of the growth factors found in bone are not known. We examined whether cultured fetal bovine bone cells synthesize FGF. These cells express characteristic markers of the osteoblast phenotype, including expression of bone Gla protein (osteocalcin) and mineralization. Heparin-Sepharose fractionation of cell extracts revealed that bone cells contained a basic FGF (bFGF)-like molecule, that displayed high affinity for heparin. The growth factor was mitogenic for adrenal cortex-derived endothelial cells and osteoblast-like bone cells. The major peak of biological activity corresponded to a peak of immunoreactive bFGF. When analyzed by Western blot, the active fractions contained a bFGF-like immunoreactive species with a mol wt of 15,000, a mass identical to that of (des-1-15)bFGF. Based on RIA, the bone cell extract contained an estimated 95 ng bFGF/mg cell protein. An acidic FGF-like molecule with lower affinity for heparin was also present in the purified bone cell extracts, although at an approximately 10-fold lower concentration than bFGF. These results demonstrate that bone cells synthesize a mitogen indistinguishable from bFGF. In addition, Northern analysis revealed that the bone cells expressed 3.5- and 7.0-kilobase bFGF gene transcripts. We next examined whether the bone cell-derived bFGF is stored in a bioactive form in the extracellular matrix. Bone cells synthesized an extracellular matrix which was mitogenic for adrenal cortex-derived endothelial cells. However, if the bone cell extracellular matrix was preincubated with neutralizing anti-bFGF antibodies, its mitogenic properties were abolished. This suggests that bone cell-derived bFGF may function as an autocrine or paracrine mitogen via its deposition into the extracellular matrix of bone.