Fibroblast growth factor receptor 3 (FGFR3) is one of four high-affinity tyrosine kinase receptors for the FGF family of ligands, frequently associated with growth arrest and induction of differentiation. The extracellular immunoglobulin (IgG)-like domains II and III are responsible for ligand binding; alternative usage of exons IIIb and IIIc of the Ig-like domain III determining the ligand-binding specificity of the receptor. By reverse transcriptase polymerase chain reaction (RT -PCR) a novel FGFR3IIIc variant FGFR3IIIS, expressed in a high proportion of tumours and tumour cell lines but rarely in normal tissues, has been identified. Unlike recently described nonsense transcripts of FGFR3, the coding region of FGFR3IIIS remains in-frame producing a novel protein. The protein product is coexpressed with FGFR3IIIc in the membrane and soluble cell fractions; expression in the soluble fraction is decreased after exposure to bFGF but not aFGF. Knockout of FGFR3IIIS using antisense has a growth-inhibitory effect in vitro, suggesting a dominantnegative function for FGFR3IIIS inhibiting FGFR3-induced growth arrest. In summary, alternative splicing of the FGFR3 Ig-domain III represents a mechanism for the generation of receptor diversity. FGFR3IIIS may regulate FGF and FGFR trafficking and function, possibly contributing to the development of a malignant phenotype.