Summary Alkaline phosphatase, a marker of differentiation in the human alveolar adenocarcinoma cell line A549, is inducible by conditioned medium from lung fibroblasts and by cytokines including oncostatin M and interleukin 6, but only in the presence of a glucocorticoid, dexamethasone. Dexamethasone was shown to induce incorporation of [3H]glucosamine into three fractions of medium and cell trypsinate from subconfluent A549 cells, eluting from DEAE ion-exchange chromatography. The first peak did not correspond to any of the unlabelled glycosaminoglycans and was not characterized further. Induction was seen in two other peaks, corresponding to hyaluronic acid and heparan sulphate. Of these, heparan sulphate, eluting as one well-defined peak (referred to as HS1) and another of lower activity and less well defined (HS2), was selected as the most likely to interact with growth factors and cytokines and was isolated from the eluate, concentrated and desalted, and used in alkaline phosphatase induction experiments in place of dexamethasone. HS1 isolated from the medium (HS1m) of subconfluent A549 cells was shown to replace dexamethasone in induction experiments with fibroblast-conditioned medium, oncostatin M and interleukin 6. HS1 from the cell trypsinate and HS2 from the medium and trypsinate were inactive. As the activity of HS1m could be abolished by heparinase and heparitinase but not by chondroitinase ABC, it was concluded that HS1 m was a fraction of heparan sulphate involved in the regulation of paracrine growth factor activity in lung fibroblast-conditioned medium, and in the regulation of other growth factors with potential roles in the paracrine control of cell differentiation.Keywords: glucocorticoid; heparan sulphate; adenocarcinoma; oncostatin M; interleukin 6; paracrine; fibroblast Differentiation of the mature phenotype in alveolar type II pneumocytes is marked by the production of lipid pulmonary surfactant (PS) and surfactant-associated proteins (Hawgood and Clements, 1990) and by an increase in alkaline phosphatase (AP) activity (Edelson et al, 1988). Perinatal induction of differentiation is mediated by glucocorticoids and a paracrine factor, or factors, from mesenchymally derived cells in the lung (Caniggia et al, 1991). In vitro, the synthesis of pulmonary surfactant and alkaline phosphatase can be induced in A549, a cell line derived from a human lung adenocarcinoma (Giard et al 1972), of reputedly type II cell origin (Lieber et al, 1976), by conditioned medium from lung fibroblasts (CM) (Speirs et al, 1991). Whereas induction of PS synthesis by CM was enhanced by treating the fibroblasts with dexamethasone (DX) before and during the conditioning process, DX was not required for the action of the CM on the A549 cells (Speirs et al, 1991). It is, however, required for the induction of alkaline phosphatase by CM and by several cytokines, such as oncostatin M (OSM), interleukin 6 (IL-6), and interferons a and [3, and by insulin (McCormick et al, 1995;McCormick and Freshney, 1996). OSM has been fou...