The rapid progress in the cloning of proteoglycan genes has enabled investigators to examine in depth the functional roles these polyhedric molecules play in the control of cell proliferation. Decorin, a leucine-rich proteoglycan expressed by most connective tissues, is a prototype molecule that regulates cellular growth via two mechanisms: modulation of growth factor activity and matrix assembly. We now provide direct evidence that human colon cancer cells stably transfected with decorin cDNA exhibit a marked suppression of the transformed phenotype: the cells have a reduced growth rate in vitro, form small colonies in soft agar, and do not generate tumors in scid/scid mice. Several independent clones are arrested in the G1 phase of the cell cycle, and their growth suppression can be restored by treatment with decorin antisense oligodeoxynucleotides. These effects are independent of growth factors and are not due to either clonal selection or integration site of the decorin gene. These findings correlate well with the observation that decorin gene expression is markedly up-regulated during quiescence. Decorin thus appears to be one component of a negative loop that controls cell growth.