Fibroblast growth factor-7 (FGF-7) and a specific splice variant of the FGF tyrosine kinase receptor family (FGFR2IIIb) constitute a paracrine signaling system from stroma to epithelium. Different effects of the manipulation of cellular heparan sulfates and heparin on activities of FGF-7 relative to FGF-1 in epithelial cells suggest that pericellular heparan sulfates may regulate the activity of FGF-7 by a different mechanism than other FGFs. In this report, we employ the heparan sulfate-binding protein, protamine sulfate, to reversibly block cellular heparan sulfates. Protamine sulfate, which does not bind significantly to FGF-7 or FGFR2IIIb, inhibited FGF-7 activities, but not those of epidermal growth factor. The inhibition was overcome by increasing the concentrations of FGF-7 or heparin. Heparin was essential for binding of FGF-7 to recombinant FGFR2IIIb expressed in insect cells or FGFR2IIIb purified away from cell products. These results suggest that, similar to other FGF polypeptides, heparan sulfate within the pericellular matrix is required for activity of FGF-7. Differences in response to heparin and alterations in the BULK heparan sulfate content of cells likely reflect FGF-specific differences in the cellular repertoire of multivalent heparan sulfate chains required for assembly and activation of the FGF signal transduction complex.