Proliferating rat smooth muscle cells and fibroblasts have membrane-associated protease activity. High concentrations of heparin inhibited membrane-associated protease activity and cell proliferation, while low concentration of heparin promoted smooth muscle cell proliferation. The inhibition of protease activity and proliferation was abolished when heparin was treated with protamine sulfate or when acid treated fetal calf serum was used. Heparin required the presence of an acid labile factor(s) in serum for the inhibition of protease activity and proliferation. Heparin and antithrombin III in the presence of acid-treated fetal calf serum did not inhibit cell proliferation or protease activity. Cartilage factors isolated from bovine nasal cartilage containing trypsin inhibitory activity, but not papain inhibitory activity, inhibited rat smooth muscle and fibroblast proliferation and surface associated protease activity. The cartilage factors did not require acid-labile components in the fetal calf serum for the inhibitory activity. The inhibitory activity due to heparin and cartilage factors was not permanent under our experimental condition. Protein synthesis was not inhibited by heparin or the cartilage factors. In rat smooth muscle cells and fibroblasts, the expression of surface-associated protease activity was related to the proliferative state of the cells. Surface protease activity was only present on proliferating cells. When surface protease activity was inhibited by high concentrations of heparin in the presence of an acid-labile serum component(s) or cartilage factors, cell proliferation was also inhibited.