Insulin-like growth factor (IGF)-binding protein-3 (IGFBP-3), the predominant IGF carrier protein in circulation, is posttranslationally modified in vivo by IGFBP-3 protease(s) into a number of fragments. Based on the ascertained and predicted recognition sites for known IGFBP-3 proteases, FLAG-epitope tagged intact IGFBP-3, NH2-terminal((1-97)), intermediate fragment((88-148)), and COOH-terminal fragments((98-264)) and ((184-264)), were generated in a baculovirus and/or Escherichia coli expression system and examined, by Western ligand blot and affinity cross-linking assays, for their ability to bind IGF and insulin. The NH2- and COOH-terminal fragments bound both IGF and insulin specifically (albeit with significantly reduced affinity) for IGF but higher affinity for insulin, when compared with intact IGFBP-3. The effect of IGFBP-3 and the fragments on IGF-I receptor (IGFIR) signaling pathways was studied by testing ICF-I-induced receptor autophosphorylation in IGFIR-overexpressing NIH-3T3 cells. IGFBP-3 showed a dose-dependent inhibition of autophosphorylation of the beta -subunit of IGFIR. The ((1-97)) NH2-terminal fragment inhibited IGFIR autophosphorylation at high concentrations, and this effect seems largely attributable to sequestration of IGF-I. In contrast, no inhibition of IGF-I-induced IGFIR autophosphorylation was detectable with the ((98-264)) and ((184-264)) COOH-terminal fragments, despite their ability to bind IGF. However, unlike the (1-97)NH2-terminal fragment, the COOH-terminal fragments of IGFBP-3 retained their ability to associate with the cell surface, and this binding was competed by heparin, similar to intact IGFBP-3.