The keratinocyte lipid-binding protein (KLBP) has been identified on the basis of nucleotide sequence analysis of its cloned cDNA as a new member of the intracellular lipid-binding protein (iLBP) multigene family. To characterize KLBP and determine its ligand-binding properties, its cDNA was subcloned into Escherichia coli, and the protein was overexpressed and purified to homogeneity by a combination of acid extraction, gel permeation, and ion-exchange chromatographies. Purified KLBP exhibited high-affinity binding of the fluorescent hydrophobic probe 1-anilinonaphthalene-8-sulfonate (1,8-ANS), displaying an apparent dissociation constant of 390 ± 90 nM (n = 0.74 ± 0.2). Using an assay based upon displacement of the bound fluorophore, KLBP was found to bind long chain fatty acids most avidly; oleic acid (18:1) bound with an apparent K(d) of 248 ± 12 nM, and arachidonic acid (20:4) exhibited a dissociation constant of 318 ± 14 nM. As the length of the fatty acid decreased, the binding affinity was reduced; myristic acid (14:0) bound with a K(d) of 1409 ± 423 nM, but medium-chain (decanoic acid, 10:0) and short-chain (octanoic acid, 8:0) lipids were not bound at all. The protein did not bind prostaglandin E2 with any measurable affinity but did associate with eicosanoids such as 5-hydroperoxyeicosatetraenoic acid (5- HPETE; K(d) of 848 ± 211 nM) and 15-HPETE (K(d) of 463 ± 243 nM) and to a lesser extent their hydroxy derivatives, 5-HETE and 15-HETE (K(d) of 1560 ± 115 nM and greater than 4 μM, respectively). all-trans-Retinoic acid was a weak ligand for KLBP, binding with a K(d) of 3600 nM, and all-trans-retinol did not displace 1,8-ANS. Molecular modeling of the KLBP sequence upon the X- ray crystal structures of several iLBP's suggested that the side chains of one or more cysteine residues may reside within the putative ligand-binding cavity. Consistent with this, sulfhydryl titration of purified KLBP with 5,5'-dithiobis(2-nitrobenzoic acid) at pH 8.0 in the presence and absence of oleic acid revealed that at least one residue was protected from modification by the fatty acid. These results describe the first purification and characterization of the ligand-binding properties of KLBP and indicate that the protein is a fatty acid binding protein with a tertiary structure likely to be similar to other members of the iLBP multigene family.