Dermatopontin, a recently found low-molecular-mass component of the extracellular matrix, was studied for its interaction with decorin and transforming growth factor β (TGF-β) and its influence on TGF-β bioactivity. Dermatopontin reacted with decorin with an apparent K_d of 100 nM in a solid-phase assay. Dermatopontin inhibited the formation of the decorin–TGF-β1 complex. Decorin also competed with dermatopontin for the binding of this cytokine. The dermatopontin–decorin complex bound 3-fold more TGF-β1 than did each component individually, and binding was inhibited more strongly by decorin preincubated with dermatopontin than by dermatopontin or decorin alone. Dermatopontin augmented the biological activity of TGF-β1, as analysed by the expression of luciferase in mink lung epithelial cells transfected with a plasminogen activator inhibitor–promoter–luciferase construct, although dermatopontin itself did not show apparent induction of luciferase. Dermatopontin showed weak inhibitory activity on the proliferation of mink lung epithelial cells, and it enhanced the growth-inhibitory activity of TGF-β on these cells. Thus dermatopontin increases the cellular response to TGF-β. These findings strongly suggest that dermatopontin modifies the behaviour of TGF-β through interaction with decorin in the microenvironment of the extracellular matrix in vivo.