To identify the domain of apolipoprotein E (apo-E) involved in binding to low density lipoprotein (LDL) receptors on cultured human fibroblasts, apo-E was cleaved and the fragments were tested for receptor binding activity. Two large thrombolytic peptides (residues 1-191 and 216-299) of normal apo-E3 were combined with the phospholipid dimyristoylphosphatidylcholine (DMPC) and tested for their ability to compete with 125I-LDL for binding to the LDL (apo-B,E) receptors on human fibroblasts. The NH2-terminal two-thirds (residues 1-191) of apo-E3 was as active as intact apo-E3 . DMPC, while the smaller peptide (residues 216-299) was devoid of receptor-binding activity. When apo-E3 was digested with cyanogen bromide (CNBr) and the four largest CNBr fragments were combined with DMPC and tested, only one fragment competed with 125I-LDL for binding to cultured human fibroblasts (CNBr II, residues 126-218). This fragment possessed binding activity similar to that of human LDL. The 125I-labeled CNBr II . DMPC complex also demonstrated high affinity, calcium-dependent saturable binding to solubilized bovine adrenal membranes. The binding of CNBr II . DMPC was inhibited by 1,2-cyclohexanedione modification of arginyl residues or diketene modification of lysyl residues. In addition, the CNBr II had to be combined with DMPC before it demonstrated any receptor-binding activity. Pronase treatment of the membranes abolished the ability of this fragment to bind to the apo-B,E receptors. This same basic region in the center of the molecule has been implicated as the apo-B,E receptor-binding domain not only by this study but also by other studies showing that 1) natural mutants of apo-E that display defective binding have single amino acid substitutions at residues 145, 146, or 158; and 2) the apo-E epitope of the monoclonal antibody 1D7, which inhibits apo-E binding, is centered around residues 139-146.