Insulin-like growth factor-1 (IGF-1) is a small protein that promotes cell survival and growth, often acting over long distances. Although for decades IGF-1 has been considered to have therapeutic potential, systemic side effects of IGF-1 are significant, and local delivery of IGF-1 for tissue repair has been a long-standing challenge. In this study, we designed and purified a novel protein, heparin-binding IGF-1 (Xp-HB-IGF-1), which is a fusion protein of native IGF-1 with the heparin-binding domain of heparin-binding epidermal growth factor-like growth factor. Xp-HB-IGF-1 bound selectively to heparin as well as the cell surfaces of 3T3 fibroblasts, neonatal cardiac myocytes and differentiating ES cells. Xp-HB-IGF-1 activated the IGF-1 receptor and Akt with identical kinetics and dose response, indicating no compromise of biological activity due to the heparin-binding domain. Because cartilage is a proteoglycan-rich environment and IGF-1 is a known stimulus for chondrocyte biosynthesis, we then studied the effectiveness of Xp-HB-IGF-1 in cartilage. Xp-HB-IGF-1 was selectively retained by cartilage explants and led to sustained chondrocyte proteoglycan biosynthesis compared to IGF-1. These data show that the strategy of engineering a "long-distance" growth factor like IGF-1 for local delivery may be useful for tissue repair and minimizing systemic effects.