Conditioned medium factor (CMF), is an 80 kD glycoprotein which is the ligand in a cell density sensing system used by developing Dictyostelium discoideum cells. CMF is slowly secreted by cells when they starve, and the extracellular level of CMF then becomes an indicator that is sensed to determine the density of starving cells. CMF cDNA has been cloned and encodes a novel 62.6 kD protein. Bacterially synthesized recombinant CMF has as much CMF activity as native CMF, indicating that glycosylation is not required for the activity. The active site of the CMF protein lies within an 88 amino acid region near the N-terminus. Immunofluorescence with affinity-purified anti-CMF antibodies indicates that CMF is present in all vegetative and developing cells. In the vegetative cells, CMF is sequestered inside previously uncharacterized vesicles and begins to be slowly secreted upon starvation. CMF antisense transformants do not aggregate unless starved in the presence of exogenous CMF. To understand how CMF regulates the aggregation of cells, the effect of CMF on cAMP signal transduction was examined. The activation of Ca\sp++ influx in response to a pulse of cAMP is strongly inhibited in cells lacking CMF and can be rescued by as little as 10 seconds exposure of cells to CMF. The activation of phospholipase C and the binding of GTP to the membranes in response to cAMP are not affected by CMF. To determine whether CMF is sensed by cell surface receptors, we examined binding of iodinated recombinant CMF to live cells. We found saturable binding to six-hour-starved cells at 3.4 × 10\sp4 molecules/cell with a K\sbD of 2.1 nM. The binding saturates in 30 minutes and a Scatchard plot of the binding data indicates that there is only one class of receptor. The binding can be competed with either the native endogenous CMF, recombinant CMF, or the 88 amino acid active fragment region. Very little binding is seen to vegetative cells, with maximal binding seen in cells starved for 6-8 hours. Normal levels of CMF binding are observed with CMF antisense cells, this data indicates that CMF is not required for the accumulation of its own receptor.