Purpose: Fibromodulin is a collagen modulating protein belonging to the family of the small leucine rich repeat proteoglycans. The collagen modulating effect is demonstrated by in vitro fibrillogenesis assay, resulting in retardation of turbidity compared to fibrillogenesis by collagen alone. Fibromodulin binds collagen via the LRR domain, but whether the binding via the LRR has any role in the assembly of the collagen is not clear. Fibromodulin null mice have larger population of thinner collagen fibers in ligaments compared to the wild type mice and develop osteoarthritis due to joint instability, indicating a regulatory role by fibromodulin in vivo as well. The N-terminal domain of fibromodulin has a highly negative charge due to the presence of the posttranslational modification O-sulfation on tyrosine residues that binds heparin binding proteins. The aim of this work is to investigate binding of this domain to collagen and its role in the regulation of collagen fibril assembly. Methods: Different variants of fibromodulin (full length, the N-terminal domain of fibromodulin and N-terminal truncated fibromodulin) were used to study interaction to collagen type I in solid phase assay and surface plasmon resonance assay. Fibrillogenesis assay was used to monitor changes in turbidity over time in the presence of the different variants of fibromodulin. Samples were collected from the fibril formation and visualized by EM negative staining. Specific binding sites for fibromodulin on the collagen monomers by detection with a gold-labeled fibromodulin specific antibody was also identified by EM negative staining. Results: In solid phase assay, all three variants of fibromodulin bind to coated collagen type I, showing a novel binding site located in the N-terminal domain of fibromodulin. By surface plasmon resonance a distinct difference in the dissociation phase is observed. The dissociation of full-length fibromodulin is much slower compared to the N-terminal truncated variant of fibromodulin, indicating contribution of both the N-terminal site and the LRR-domain sites in binding to the collagen molecule. In an in vitro fibrillogenesis assay, full-length and N-terminal truncated fibromodulin delays the fibril formation. Adding the N-terminal tyrosin sulfate rich domain instead accelerates the fibril formation, indicating that this domain binds and facilitates collagen monomer assembly. Samples taken after 24 h of fibril formation in the presence of the different fibromodulin variants or PBS were analysed by electron microscopy. Full-length fibromodulin shows the thinnest fibers, but with the most mature cross-striation. Presence of the N-terminal also results in thinner fibers compared to the control and the N-terminal truncated variant but showed less maturation. Further, all three variants bind to three common sites on the collagen type I molecule, visualized by electron microscopy. An informative observation by the electron microscopy is the finding of full-length fibromodulin binding two collagen molecules at the same time. This shows engagement of the N-terminal and one of the binding sites in the LRR region, concomitantly binding different collagen molecules, which can be important for the assembly. Conclusion: This work shows that the tyrosine sulfate rich domain of fibromodulin contributes to the high affinity binding of the fibromodulin molecule to collagen. It influences and contributes to the arrangement of the collagen molecules, which results in well defined, highly organized collagen fibers.