Mutations in human cartilage oligomeric matrix protein (COMP)have been linked to the development of pseudoachondroplasia and multiple epiphyseal dysplasia; however, the functions of both wild-type and mutant COMP in the skeletogenesis remain unknown. In an effort to define the biological functions of COMP, a functional genetic screen based on the yeast two-hybrid system was performed. This led to the identification of granulin-epithelin precursor (GEP), an autocrine growth factor, as a COMP-associated partner. COMP directly binds to GEP both in vitro and in vivo, as revealed by in vitro pull down and co-immunoprecipitation assays. GEP selectively interacts with the epidermal growth factor repeat domain of COMP but not with the other three functional domains of COMP. The granulin A repeat unit of GEP is required and sufficient for association with COMP. COMP co-localizes with GEP predominantly in the pericellular matrix of transfected rat chondrosarcoma cell and primary human chondrocytes. Staining of musculoskeletal tissues of day 19 mouse embryo with antibodies to GEP is restricted to chondrocytes in the lower proliferative and upper hypertrophic zones. Overexpression of GEP stimulates the proliferation of chondrocytes, and this stimulation is enhanced by COMP. In addition, COMP appears to be required for GEP-mediated chondrocyte proliferation, since chondrocyte proliferation induced by GEP is dramatically inhibited by an anti-COMP antibody. These findings provide the first evidence linking the association of COMP and GEP and identifying a previously unrecognized growth factor (i.e. GEP) in cartilage.