Decorin is ubiquitously distributed in the extracellular matrix of mammals and a member of the proteoglycan family characterized by a core protein dominated by leucine-rich repeat motifs. We show here that decorin extracted from bovine tissues under denaturing conditions or produced in recombinant "native" form by cultured mammalian cells has a high affinity for Zn2+ as demonstrated by equilibrium dialyses. The Zn2+-binding sites are localized to the N-terminal domain of the core protein that contains 4 Cys residues in a spacing reminiscent of a zinc finger. A recombinant 41-amino acid long peptide representing the N-terminal domain of decorin has full Zn2+ binding activity and binds two Zn2+ ions with an average KD of 3 x 10(-7) M. Binding of Zn2+ to this peptide results in a change in secondary structure as shown by circular dichroism spectroscopy. Biglycan, a proteoglycan that is structurally closely related to decorin contains a similar high affinity Zn2+-binding segment, whereas the structurally more distantly related proteoglycans, epiphycan and osteoglycin, do not bind Zn2+ with high affinity.