The growth of regenerating limbs of amphibians depends upon proliferation of the blastema cells that accumulate beneath the epidermal cap. The epidermal cap is known to be mitogenic for the blastema cells. We have extracted a mitogenic activity from both the mesenchymal and epidermal (epidermal cap) components of cone stage blastemas which is retained on heparin-Sepharose and elutes with 1.15 M NaCl. This fraction stimulates neurite outgrowth of PC12 cells and [3H]thymidine incorporation into CCL 39 cells and is potentiated by heparin. The 2 M fraction was inactive. The heparin-Sepharose-purified growth factor cross-reacts with bovine acidic FGF polyclonal antibodies and shows a Mr of 16,000 on Western blots. Blastema membranes contain specific high affinity binding sites (Kd = 25 pM; capacity = 30 fmole/mg protein) and low affinity binding sites (Kd = 18 nM; capacity = 30 pmole/mg protein) for aFGF as revealed by Scatchard analysis. 125I-aFGF which is bound specifically by both the epidermal cap and mesenchyme of blastema frozen sections is displaced by an excess of unlabeled factor and inhibited by heparin. Heparinase treatment and 2 M NaCl washing which decreased the binding was fourfold more efficient for epidermal cap than for mesenchyme suggesting the presence of high affinity receptors in the latter tissue. The presence of aFGF (or a closely related molecule) in blastemas is consistent with our earlier results that showed stimulation of proliferation of cultured blastema cells by acidic or basic FGF or heparin alone. These results suggest the possibility that aFGF is stored in the epidermal cap during limb regeneration and that it stimulates the proliferation of the underlaying mesenchyme.