Fibroblast growth factors (FGFs) play critical roles in development, maintenance, and repair following injury or disease in the lung. Their activity is modulated by a variety of factors, including fibroblast growth factor-binding protein (FGF-BP; HBp-17) and N-deacetylase/N-sulfotransferase-1 (NDST-1). Functionally, FGF-BP shuttles FGFs from binding sites in extracellular matrices (ECMs) to cell surfaces and enhances FGF binding and signaling, while NDST-1 adds sulfate groups to FGF co-receptor proteoglycans and modulates alveolar type II (ATII) cell maturation and differentiation. Since the sulfated nature of ECMs is a critical determinant of their relationship with FGFs, we predicted that ECMs and their sulfation would modulate the expression of FGF-BP and NDST-1. To examine this question, selected culture conditions of rat ATII cells were manipulated (with and without co-culture with rat lung fibroblasts (RLFs)) by treatment with heparin or sodium chlorate (inhibitor of sulfation) for 24-96 hours. In addition, ECMs biosynthesized by RLFs for up to 10 days prior to co-culture were used as model intervening barriers to communication between alveolar cells and fibroblasts. FGF-BP expression was enhanced in ATII cells by co-culture with RLF cells, and least suppressed by desulfated heparin. NDST-1 expression in ATII cells was most sensitive to the amount of sulfation in medium and ECM and enhanced by fully sulfated heparin. Preformed ECM appears to supply factors that modify subsequent treatment effects. These results demonstrate a potentially important modulatory influence of sulfated ECMs and fibroblasts on FGF-BP and NDST-1 at the gene expression level.