Clones for a novel transmembrane receptor termed FGFRL1 were isolated from a subtracted, cartilage-specific cDNA library prepared from chicken sterna. Homologous sequences were identified in other vertebrates, including man, mouse, rat and fish, but not in invertebrates such as Caenorhabditis elegans and Drosophila. FGFRL1 was expressed preferentially in skeletal tissues as demonstrated by Northern blotting and in situ hybridization. Small amounts of the FGFRL1 mRNA were also detected in other tissues such as skeletal muscle and heart. The novel protein contained three extracellular Ig-like domains that were related to the members of the fibroblast growth factor (FGF) receptor family. However, it lacked the intracellular protein tyrosine kinase domain required for signal transduction by transphosphorylation. When expressed in cultured cells as a fusion protein with green fluorescent protein, FGFRL1 was specifically localized to the plasma membrane where it might interact with FGF ligands. Recombinant FGFRL1 protein was produced in a baculovirus system with intact disulfide bonds. Similar to FGF receptors, the expressed protein interacted specifically with heparin and with FGF2. When overexpressed in MG-63 osteosarcoma cells, the novel receptor had a negative effect on cell proliferation. Taken together our data are consistent with the view that FGFRL1 acts as a decoy receptor for FGF ligands.Most bones of the vertebrate skeleton are formed by a complex process termed endochondral ossification which involves a cartilage intermediate (1). This intermediate represents a highly specialized connective tissue. It consists of a single cell type, the chondrocytes, which are embedded in a rich extracellular matrix (2). Typically, this matrix makes up more than 90% of the cartilage volume and consists of collagens (types II, IX, X, and XI), proteoglycans (aggrecan, small leucine-rich proteins), and glycoproteins (matrilins, COMP).During the first step of endochondral ossification, mesenchymal cells condense and differentiate into chondrocytes (3). These chondrocytes proliferate rapidly and lay down the cartilaginous model of the future bones. The chondrocytes undergo a complex series of distinct developmental stages, including proliferation, maturation, and hypertrophy. The hypertrophic cartilage is calcified and becomes vascularized. Finally, the calcified cartilage is invaded by osteoclasts and osteoblasts, which replace the cartilaginous tissue by bone.Cartilage has become a popular tissue to study cell proliferation and differentiation in vitro (3). When cultivated on plastic dishes, chondrocytes rapidly dedifferentiate into fibroblast-like cells. In three-dimensional lattices, however, the chondrocytes undergo the ordered sequence of events observed during differentiation and maturation of cartilage in vivo. Three stages of chondrocyte differentiation have been defined in vitro: proliferative chondrocytes producing mainly collagen II, hypertrophic chondrocytes producing collagen X, and osteoblast-like cells producing...