Heparin is required for fibroblast growth factor (FGF) stimulation of biological responses. Using isothermal titration calorimetry, we show that acidic FGF (aFGF) forms a 1:1 complex with the soluble extracellular domain of FGF receptor (FGFR). Heparin exerts its effect by binding to many molecules of aFGF. The resulting aFGF-heparin complex can bind to several receptor molecules, leading to FGFR dimerization. In two cell lines lacking endogenous heparan sulfate, exogenous heparin is required for FGFR dimerization, tyrosine kinase activation, c-fos mRNA transcription, and cell proliferation. Moreover, a synthetic heparin analog that binds monovalently to aFGF blocks FGFR dimerization, activation, and signaling via FGFR. We propose that heparin causes oligomerization of aFGF such that its binding to FGFR results in dimerization and activation. This represents a novel mechanism for transmembrane signaling and may account for the action of many heparin-bound growth factors.