In studying the functional role of an extracellular matrix proteoglycan, decorin, we have made observations that suggest a role for this proteoglycan in the control of cell proliferation. Extracellular matrices are made up of different combinations of collagens, elastin, hyaluronic acid, proteoglycans and various glycoproteins such as fibronectin. Most of these components can interact with cells, and much of the control of cell adhesion, migration and differentiation appears to be mediated by these interactions. Earlier studies have also attributed growth-regulatory activities to intact extracellular matrices, but the individual molecules responsible for these effects have not been characterized. We report here that Chinese hamster ovary (CHO) cell lines expressing human decorin from a stably transfected complementary DNA construct form a more orderly monolayer and grow to a lower saturation density than control cells lacking decorin. The extent of the morphological changes correlates with the level of decorin expression, and the saturation density is inversely proportional to it. The reduction in the saturation densities of the cell lines with the highest expression of decorin is more than 50%. These results reveal a novel growth inhibitory mechanism which may be related to contact inhibition of cell proliferation.