The interaction of cells with the extracellular matrix (ECM) form of fibronectin (FN) triggers changes in growth, migration, and cytoskeletal organization that differ from those generated by soluble FN. As cells deposit and remodel their FN matrix, the exposure of new epitopes may serve to initiate responses unique to matrix FN. To determine whether a matricryptic site within the III1 module of FN modulates cell growth or cytoskeletal organization, a recombinant FN with properties of matrix FN was constructed by directly linking the cryptic, heparin-binding COOH-terminal fragment of III1 (III1H) to the integrin-binding III8–10 modules (glutathione-S-transferase [GST]–III1H,8–10). GST–III1H,8–10 specifically stimulated increases in cell growth and contractility; integrin ligation alone was ineffective. A construct lacking the integrin-binding domain (GST–III1H,2–4) retained the ability to stimulate cell contraction, but was unable to stimulate cell growth. Both GST–III1H,2–4 and matrix FN colocalized with caveolin and fractionated with low-density membrane complexes by a mechanism that required heparan sulfate proteoglycans. Disruption of caveolae inhibited the FN- and III1H-mediated increases in cell contraction and growth. These data suggest that a portion of ECM FN partitions into lipid rafts and differentially regulates cytoskeletal organization and growth, in part, through the exposure of a neoepitope within the conformationally labile III1 module.