A variant of CD44 containing exon v3 sequences is expressed in the apical ectodermal ridge of the limb bud during embryogenesis. This variant is modified by heparan sulfate moieties and acts as low affinity receptor for FGFs. These FGFs are presented by CD44 to mesenchymal cells which induces their proliferation and limb outgrowth. We suggest that a similar growthfactor presentation mechanism accounts for the function of CD44 variants on metastasizing tumor cells.