Fetal liver kinase-1 (Flk-1) is a transmembrane tyrosine kinase that was identified in endothelial cells and populations of cells enriched in hematopoietic progenitors. To characterize the interaction of Flk-1 with potential ligands the receptor extracellular domain was genetically fused to an alkaline phosphatase (AP) tag. A soluble ligand for Flk-1 was identified in the supernatants of numerous mesenchymal cell lines by co-immunoprecipitation with the Flk1-AP fusion protein. This polypeptide was shown by N-terminal sequencing to be vascular endothelial growth factor (VEGF). Receptor-AP fusion proteins can thus be used to identify soluble ligands as well as transmembrane ligands, and this approach is therefore likely to be widely applicable to many types of orphan receptor. The Flk1-AP soluble receptor was also found to bind to cell surfaces, showing two apparent classes of binding site with different affinities. This interaction could be reconstructed by introducing a VEGF expression plasmid into cells. These results indicate that VEGF presented at the cell surface can bind to the Flk-1 receptor, and could mediate a direct cell-cell interaction. The Flk1-AP fusion protein was also found to bind heparin, implying that ligand binding by the Flk-1 receptor may involve a three way interaction between the Flk-1 receptor, VEGF, and heparin-like cell surface proteoglycans.