Insulin-like growth factor binding protein-3 (IGFBP-3) is a multifunctional protein which regulates the potent mitogenic and antiapoptotic effects of IGF-I and IGF-II, and exerts bioactivity independent of modulating IGF receptor activation. Previous studies have shown that in solution, IGFBP-3 binds constituent proteins of the extracellular matrix (ECM) such as fibronectin and collagen, and is present in ECM deposited by fibroblasts in vitro; however, binding of IGFBP-3 to matrix has not been characterized, nor has its function in this environment been investigated. In this study, we show that IGFBP-3 binds to ECM deposited by human breast epithelial and cancer cells, and neonatal human fibroblasts. IGF-I and heparin blocked binding of IGFBP-3 to matrix when added with the binding protein, but were unable to displace IGFBP-3 already bound to the matrix. IGF-I bound to matrix-immobilized IGFBP-3 with approximately 25-fold reduced affinity compared with IGFBP-3 in solution. Mutation of the C-terminal basic domain of IGFBP-3 (228KGRKRMDGEA) resulted in markedly reduced binding to matrix compared with wild-type IGFBP-3, while mutation of the adjacent consensus heparin binding domain (220KKKHSR) had relatively little effect. In the presence of matrix-bound IGFBP-3, adhesion of breast epithelial cells was increased by 25%, and activation of the signaling pathway intermediate p44/42 MAPK was enhanced greater than 3-fold. These results indicate a previously unrecognized and potentially important role for IGFBP-3 in the extracellular matrix.