The matricellular protein SPARC (secreted protein acidic and rich in cysteine) has been implicated in development, differentiation, response to injury, and tumor biology by virtue of its regulation of extracellular matrix production/assembly and its antiadhesive and antiproliferative effects on different cell types. Despite numerous biological activities described for SPARC, cell surface receptors for this protein have not been identified. By phage display and in vitro-binding assays, we now show that SPARC interacts with stabilin-1, a scavenger receptor expressed by tissue macrophages and sinusoidal endothelial cells. The interaction is mediated by the extracellular epidermal growth factor-like region of stabilin-1 containing the sequence FHGTAC. Using FACS analysis and confocal microscopy, we demonstrate that stabilin-1 internalizes and targets SPARC to an endosomal pathway in Chinese hamster ovary cells stably transfected with this receptor. In human macrophages, stabilin-1 expression is required for receptor-mediated endocytosis of SPARC. SPARC was efficiently endocytosed by alternatively activated macrophages stimulated by IL-4 and dexamethasone, but not solely by Th1 or Th2 cytokines. A time course of ligand exposure to alternatively activated macrophages revealed that stabilin-1-mediated endocytosis of SPARC was followed by its targeting for degradation, similar to the targeting of acetylated low density lipoprotein, another stabilin-1 ligand. We propose that alternatively activated macrophages coordinate extracellular matrix remodeling, angiogenesis, and tumor progression via stabilin-1-mediated endocytosis of SPARC and thereby regulate its extracellular concentration.