Hepatocyte growth factor/scatter factor (HGF/SF) is a heparin-binding polypeptide that stimulates cell proliferation, motility, and morphogenesis by activation of its receptor, the c-Met tyrosine kinase. HGF/SF consists of a series of structural units, including an amino-terminal segment with a hairpin loop, four kringle domains, and a serine protease-like region. In this study, we demonstrate that the amino-terminal (N) domain retains the heparin-binding properties of full-length HGF/SF. In contrast to a previous hypothesis, selected basic amino acid residues in the hairpin loop are not critical for heparin binding, although alanine substitution at a subset of these sites markedly reduced the biological activity of the HGF/SF isoform, HGF/NK1. Covalent cross-linking experiments performed with wild-type and heparan sulfate glycosaminoglycan (HSGAG)-deficient Chinese hamster ovary (CHO) cells revealed that Met-HGF/NK1 binding was strongly dependent on HSGAG. Addition of heparin to HSGAG-deficient CHO cells not only restored ligand binding, but also increased ligand-dependent Met tyrosine phosphorylation and c-fos expression. Moreover, our results showed that heparin stimulated ligand oligomerization through an interaction with the N domain. These findings establish the importance of the N domain for heparin-ligand and ligand-ligand interactions, and demonstrate a crucial role for HSGAG in receptor binding and signal transduction.