Bone has an enormous capacity for growth, regeneration, and remodeling. This capacity is largely due to induction of osteoblasts that are recruited to the site of bone formation. The recruitment of osteoblasts has not been fully elucidated, though the immediate environment of the cells is likely to play a role via cell-matrix interactions. We show here that heparin-binding growth-associated molecule (HB-GAM), an extracellular matrix-associated protein that enhances migratory responses in neurons, is prominently expressed in the cell matrices that act as target substrates for bone formation. Intriguingly, N-syndecan, which acts as a receptor for HB-GAM, is expressed by osteoblasts/osteoblast precursors, whose ultrastructural phenotypes suggest active cell motility. The hypothesis that HBGAM/N-syndecan interaction mediates osteoblast recruitment, as inferred from developmental studies, was tested using osteoblast-type cells that express N-syndecan abundantly. These cells migrate rapidly to HBGAM in a haptotactic transfilter assay and in a migration assay where HB-GAM patterns were created on culture wells. The mechanism of migration is similar to that previously described for the HB-GAM-induced migratory response of neurons. Our hypothesis that HB- GAM/N-syndecan interaction participates in regulation of osteoblast recruitment was tested using two different in vivo models: an adjuvant- induced arthritic model and a transgenic model. In the adjuvant-induced injury model, the expression of HB-GAM and of N-syndecan is strongly upregulated in the periosteum accompanying the regenerative response of bone. In the transgenic model, the HB-GAM expression is maintained in mesenchymal tissues with the highest expression in the periosteum. The HB-GAM transgenic mice develop a phenotype characterized by an increased bone thickness. HB- GAM may thus play an important role in bone formation, probably by mediating recruitment and attachment of osteoblasts/osteoblast precursors to the appropriate substrates for deposition of new bone.