Insulin-like growth factor (IGF)-binding proteins (IGFBPs) either inhibit or enhance IGF-stimulated cellular effects. While inhibition occurs by sequestration of IGF from cell-surface receptors, the exact mechanism of IGF-enhancement remains undefined. Human osteoblast-like bone cells in culture secrete several IGF-binding proteins, one of which we have previously identified as IGFBP-5. In this study we purified a 23-kDa IGFBP-5 from cultures of human osteoblast-like cells using ligand affinity chromatography and reversed-phase high performance liquid chromatography and tested its bioactivity in serum-free cultures of normal mouse osteoblast-like cells. Binding studies with radioiodinated IGF showed similar and relatively low affinities for IGF-I and IGF-II consistent with a carboxyl truncated IGF-binding protein. Mitogenic assays demonstrated that the binding protein, when coincubated with IGF-I or -II, enhanced mitogenesis. This enhancement was unique from other binding proteins in not requiring a preincubation period or serum co-factors. Furthermore, the osteoblast-derived IGFBP-5 stimulated mitogenesis in the absence of exogenous or endogenous IGF. Using radioiodinated IGFBP-5 we found that the binding protein could associate with the osteoblast surface, an effect which did not require IGF nor an interaction with IGF receptors. We suggest that osteoblast-derived IGFBP-5 may stimulate osteoblast mitogenesis in at least two ways, by association with IGF and by a second pathway that is independent of IGF receptor activation.