Fibroblast growth factor (FGF) receptors (FGFRs) are membrane-spanning tyrosine kinase receptors that mediate regulatory signals for cell proliferation and differentiation in response to FGFs. We have previously determined that the Lys6503Glu mutation in the activation loop of the kinase domain of FGFR3, which is responsible for the lethal skeletal dysplasia thanatophoric dyplasia type II (TDII), greatly enhances the ligand-independent kinase activity of the receptor. Here, we demonstrate that expression of this construct induces a c-fos promoter construct approximately 10-fold but does not lead to proliferation or morphological transformation of NIH 3T3 cells. In contrast, the isolated kinase domain of activated FGFR3, targeted to the plasma membrane by a myristylation signal, is able to stimulate c-fos expression by 40-fold, induce proliferation of quiescent cells, and morphologically transform fibroblasts. This result suggests that the extracellular and transmembrane domains of FGFRs exert a negative regulatory influence on the activity of the kinase domain. Targeting of the activated kinase domain to either the cytoplasm or the nucleus does not significantly affect biological signaling, suggesting that signals from FGFR3 resulting in mitogenesis originate exclusively from the plasma membrane. Furthermore, our novel observation that expression of a highly activated FGFR3 kinase domain is able to morphologically transform fibroblasts suggests that dysregulation of FGFR3 has the potential to play a role in human neoplasia.Fibroblast growth factor (FGF) receptors (FGFRs) are high-affinity membrane-spanning receptors for FGFs. FGFRs are normally catalytically inactive in the absence of FGF ligands. The binding of FGF to the extracellular domain of FGFRs, in the presence of heparan sulfate proteoglycans, induces the dimerization of two receptor molecules, allowing transphosphorylation of tyrosines within the activation loop of the intracellular tyrosine kinase domains. Activation loop phosphorylation greatly enhances the ability of FGFRs to autophosphorylate as well as to phosphorylate substrates which transmit biological signals into the cell leading to cell proliferation, differentiation, angiogenesis, or embryogenesis (4,11,21,23). Although growth factor receptor-mediated signaling has traditionally been assumed to initiate from the plasma membrane, FGF-induced cell proliferation requires prolonged exposure to ligand (63), during which activated FGFRs relocalize to the perinuclear and/or nuclear compartments of the cell (35,43,44).Point mutations in different domains of three of the four highly related FGFRs have been identified as causing human developmental abnormalities, including skeletal and cranial malformation syndromes (38,40,58). Recent work suggests that the biochemical mechanism underlying these syndromes is ligand-independent activation of the FGFR tyrosine kinase activity (58), and this constitutive signal transduction is postulated to cause premature and abnormal maturation of the affected long bo...