T3 is essential for normal skeletal development. Childhood hypothyroidism causes delayed bone formation, whereas T3-excess accelerates growth and epiphyseal closure. Fibroblast growth factors (FGFs) act via receptor tyrosine kinases (FGFRs) to inhibit chondrocyte proliferation, matrix production and skeletal maturation. Dimerisation of FGFRs and their functional interaction with FGFs requires heparan sulphate proteoglycans (HSPGs). We recently showed that T3 induces FGFR-1 expression and activity in bone but also qualitatively enhances FGFR-1 mediated signalling. We also demonstrated abnormal matrix deposition in growth plates from hypothyroid rats and T3-receptor (TR) null mice. We postulated, therefore, that T3 modulates FGF signalling during endochondral ossification by regulating HSPG expression. To investigate this hypothesis, we analysed expression of HSPGs in growth plates from thyroid-manipulated rats and from TR-null (TR-deficient) and Pax8-null mice (congenital hypothyroid due to thyroid gland agenesis), both of which display grossly delayed bone formation with severe growth retardation. Immunohistochemical studies, using two monoclonal antibodies that recognise different specific HS epitopes, revealed that growth plates from hypothyroid animals were disorganised with an increased intensity and abnormal distribution of HSPG-specific staining. This was particularly evident in matrix surrounding reserve and proliferating chondrocytes and at the cell surface of proliferating and prehypertrophic cells. In addition, greatly increased numbers of heparin containing mast cells were demonstrated in the metaphyseal bone-marrow adjacent to the hypothyroid growth plate. Similar abnormalities in HSPG staining were identified in growth plates from TR-null and Pax8-null mice compared with wild-type littermates. These studies indicate that T3 regulates the distribution and expression of HSPGs within the developing growth plate and indicate a novel mechanism by which T3 controls FGF/FGFR signalling. Furthermore, HSPGs regulate the diffusion, sequestration and gradient formation of other key morphogens and growth factors during development and these studies suggest an integral role for T3 in these processes.