A rat hepatocyte cell line was cultured in Higuchi's medium with fetal calf serum and insulin and labeled with 35SO2/4-. The cells were treated with a number of ligands to displace the heparan 35SO4 proteoglycan (HSPG) from the pericellular matrix. Maximum release was obtained with D-mannose-6-PO4 (50 mM), D-glucose-6-PO4 (50 mM), myo-inositol-2-PO4 (2-5 mM), myo-inositol hexaphosphate (2-5 mM), and DL-myo-inositol-1-PO4 (1-2 mM). D-myo-Inositol-1,3,4-(PO4)3 (1 mM) and L-myo-inositol-1-PO4 (2 mM) were intermediate in their ability to release the cell surface HSPG, whereas heparin (2 mg/ml), yeast phosphomannan (4 mg/ml), D-xylose-1-PO4 (50 mM), D-glucose-6-SO4 (50 mM), and myo-inositol hexasulfate (5 mM) were ineffective. When 35SO2/4- was added to cell cultures, the total cell surface HSPG increased linearly, but the percentage of the total cell surface [35SO4]HSPG that was released by myo-inositol-PO4 increased with time during the labeling period, reaching a maximum of 65% after 5 h. When cells were labeled for 12 h without insulin in the medium, the maximum amount of cell surface HSPG that was released by myo-inositol-PO4 was reduced to 30%. However, when cells labeled in the absence of insulin were treated with phosphatidylinositol-specific phospholipase C and then myo-inositol-PO4, the release of the cell surface [35SO4]HSPG was increased to 73%. When the [35SO4]HSPG that was released from the cell surface by treatment with myo-inositol-PO4 was added to cultures of unlabeled hepatocytes, it was taken up very rapidly and a portion of the internalized HSPG was converted to free heparan SO4 chains which appeared in the nucleus. Uptake was Ca2+- and Mg2+-independent. The amount of [35SO4]HSPG taken up was markedly reduced when the myo-inositol-PO4-releasable [35SO4]HSPG was pretreated with trypsin, thermolysin, alkaline borohydride, or alkaline phosphatase. When the cells were grown in inositol-deficient medium or in the presence of myo-inositol-PO4, the amount of heparan SO4 found in the nucleus was markedly reduced, and the cells no longer exhibited contact inhibition. These effects of myo-inositol deficiency on the growth and nuclear heparan SO4 were accentuated by addition of LiCl to the cultures to prevent phosphatidylinositol synthesis from the endogenous myo-inositol-PO4.(ABSTRACT TRUNCATED AT 400 WORDS)