A 16-kilodalton N-terminal fragment of PRL (16K PRL) is formed by enzymatic cleavage of intact 23-kilodalton PRL (23K PRL) in the pituitary gland and in target tissues for PRL. 16K PRL inhibits the growth of capillary endothelial cells, while intact PRL was inactive suggesting that 16K PRL acted via a receptor other than the PRL receptor. To analyze whether this inhibitory effect could be mediated through an specific 16K PRL receptor, we characterized the binding of 16K PRL to membrane preparations of bovine brain capillary endothelial (BBE) cells. 16K PRL was generated by the proteolysis of rat 23K PRL with a particulate fraction from rat mammary gland homogenates and purified by gel filtration. The specific binding of [125I]16K PRL to BBE cell membranes was high affinity (Kd = 9.9 nM), saturable (Bmax = 4.8 pmol/mg protein), and reversible. In competition studies for [125I]16K PRL binding, 16K PRL was most potent, while little displacement was observed with high concentrations of 23K PRLs, growth hormones, and basic fibroblast growth factor. Blockade of reformation of disulfide bonds by carbamidomethylation of 16K PRL, a procedure which increases the biological activity of the molecule, increased its binding affinity (Kd = 0.9 nM). Cross-linking experiments identified a 52,000 and a 32,000 mol wt protein as the major 16K PRL binding species. These data demonstrate the presence of specific, high affinity, saturable binding sites for 16K PRL on BBE cell membranes and support biological findings that 16K PRL inhibits capillary endothelial cell proliferation, through a novel, high affinity receptor.