A proteoglycan had been isolated from the conditioned media of a human osteosarcoma cell line and had tentatively been named proteoglycan-100 (PG-100) because of the size of its core glycoprotein. Amino acid sequencing of the purified proteoglycan and cDNA analysis were consistent with the assumption that PG-100 is identical with the proteoglycan form of CSF-1 (or macrophage colony-stimulating factor). PG-100 induced mouse macrophage differentiation. Proliferation of macrophages was stimulated in a dose-dependent manner. On a molar basis, however, about 100- to 300-fold higher doses of PG-100 than of recombinant human (rh)CSF-1 were required for the half-maximal growth-stimulating effect. Upon enzymatic removal of the glycosaminoglycan chain, the purified core protein exhibited higher activity, but was still about 20-fold less active than rhCSF-1. Incubation of the purified proteoglycan for 48 h at 37 degrees C led to the formation of a glycosaminoglycan-free 50-kDa fragment either by autoproteolysis or by the action of a protease not yet identified. The purified fragment exhibited almost the same biologic activity as rhCSF-1. The glycosaminoglycan chain of the growth factor was not only shown to inhibit CSF-1 activity but also to increase the stability of the core protein when the CSF-1-producing osteosarcoma cells were maintained in a collagen lattice. These findings provide a link between a soluble, highly active cytokine and its extracellular matrix storage form of comparatively low activity.