In the absence of heparan sulfate (HS) on the surface of target cells, or free heparin (HP) in the vicinity of their receptors, fibroblast growth factor (FGF) family members cannot exert their biological activity and are easily damaged by proteolysis. This limits the utility of FGFs in a variety of applications including treatment of surgical, burn, and periodontal tissue wounds, gastric ulcers, segmental bony defects, ligament and spinal cord injury. Here we describe an FGF analog engineered to overcome this limitation by fusing FGF-1 with HS proteoglycan (PG) core protein. The fusion protein (PG-FGF-1), which was expressed in Chinese hamster ovary cells and collected from the conditioned medium, possessed both HS and chondroitin sulfate sugar chains. After fractionation, intact PG-FGF-1 proteins with little affinity to immobilized HP and high-level HS modification, but not their heparitinase or heparinase digests, exerted mitogenic activity independent of exogenous HP toward HS-free Ba/F3 transfectants expressing FGF receptor. Although PG-FGF-1 was resistant to tryptic digestion, its physiological degradation with a combination of heparitinase and trypsin augmented its mitogenic activity toward human endothelial cells. The same treatment abolished the activity of simple FGF-1 protein. By constructing a biologically active proteoglycan-FGF-1 fusion protein, we have demonstrated an approach that may prove effective for engineering not only FGF family members, but other HP-binding molecules as well.