The Glypican (GPC) family is a prototypical member of the cell‐surface heparan sulfate proteoglycans (HSPGs). The HSPGs have been demonstrated to interact with growth factors, act as coreceptors and modulate growth factor activity. Here we show that based on oligonucleotide array analysis, GPC3 was upregulated in hepatocellular carcinoma (HCC). By northern blot analysis, GPC3 mRNA was found to be upregulated in 29 of 52 cases of HCC (55.7%). By Western blot analysis carried out with a monoclonal anti‐GPC3 antibody we generated, the GPC3 protein was found to be overexpressed in 6 hepatoma cell lines, HepG2, Hep3B, HT17, HuH6, HuH7 and PLC/PRF/5, as well as 22 tumors (42.3%). To investigate the role of overexpressed GPC3 in liver cancer, we analyzed its effects on cell growth of hepatoblastoma‐derived cells. Overexpression of GPC3 modulated cell proliferation by inhibiting fibroblast growth factor 2 (FGF2) and bone morphogenetic protein 7 (BMP‐7) activity. An interaction of GPC3 and FGF2 was revealed by co‐immunoprecipitation, while GPC3 was found to inhibit BMP‐7 signaling through the Smad pathway by reporter gene assay. The modulation of growth factors by GPC3 may help explain its role in liver carcinogenesis. In addition, the ability of HCC cells to express GPC3 at high levels may serve as a new tumor marker for HCC. © 2002 Wiley‐Liss, Inc.