During cell-matrix adhesion, both tyrosine and serine/threonine kinases are activated. Integrin ligation correlates with tyrosine phosphorylation, whereas the later stages of spreading and focal adhesion and stress fiber formation in primary fibroblasts requires interactions of cell surface proteoglycan with heparin-binding moieties. This correlates with protein kinase C (PKC) activation, and PKCα can become localized to focal adhesions in normal, but not transformed, cells. PKC activation has been thought to be downstream of initial receptor-ligand interactions. We now show, however, that syndecan-4 transmembrane heparan sulfate proteoglycan and PKC co- immunoprecipitate and co-patch in vivo. The core protein of syndecan-4 can directly bind the catalytic domain of PKCα and potentiate its activation by phospholipid mediators. It can also directly activate PKCα in the absence of other mediators. This activity resides in the sequence LGKKPIYKK in the center of the short cytoplasmic domain, and other syndecans lack this sequence and PKC regulatory properties. Syndecan-4 is a focal adhesion component, and this interaction may both localize PKC and amplify its activity at sites of forming adhesions. This represents the first report of direct transmembrane signaling through cell surface proteoglycans.