Apolipoprotein (apo-) E3, when combined with the phospholipid dimyristoylphosphatidylcholine (DMPC), binds avidly to apo-B,E (low density lipoprotein) receptors on human fibroblasts. Apolipoprotein E2 isolated from type III hyperlipoproteinemic subjects, which differs from apo-E3 by the presence of cysteine instead of arginine at residue 158, possesses only about 1% of the receptor binding activity of apo-E3. Modification of apo-E2 with cysteamine, which converts the cysteine at position 158 to a positively charged lysine analogue, activates receptor binding approximately 13-fold. In the present experiments, thrombin was used to cleave apo-E2 into two fragments (Mr = 22,000 and Mr = 10,000). The larger fragment, which has been shown to possess the receptor binding domain, displayed binding activity up to 12-fold greater than intact apo-E2 or equivalent to apo-E2 treated with cysteamine. When the Mr = 22,000 fragment was modified with cysteamine and combined with DMPC, receptor binding was further enhanced, attaining the level of activity of normal apo-E3 X DMPC, a 100-fold increase over apo-E2 X DMPC binding. When the cysteamine modification was reversed by incubation with beta-mercaptoethanol, the Mr = 22,000 fragment retained most of its binding activity. However, when the same sample was tested 24 h later, the level of binding activity dropped significantly. The receptor binding of apo-E2-containing beta-very low density lipoproteins could also be activated by cysteamine treatment, with the same retention of enhanced binding activity occurring after the reversal of the modification. These results indicate that apo-E2 can attain full binding activity by the removal of the carboxyl-terminal one-third of the molecule and the addition of a positive charge at residue 158 of the molecule. The retention of enhanced binding after the reversal of the cysteamine modification indicates that the enhanced binding is probably due to conformational changes induced in the binding domain (and maintained by the phospholipid) and not merely to the presence of the positive charge at residue 158.