Ciliary neurotrophic factor (CNTF) associates with an alpha subunit (CNTFRalpha) of the receptor complex to initiate signal transduction by facilitating heterodimerization of the gp130 transducing protein and the leukemia inhibitory factor receptor (LIFR) beta. CNTFRalpha is anchored to the membrane by a glycosylphosphatidylinositol linkage; however, a soluble form of the alpha subunit can still bind CNTF to recruit the signal transducing components of the receptor complex. In the present study we show that alanine substitution for residues Thr268 and Asp269 of the CNTFRalpha subunit results in a mutated receptor subunit (R3), which can bind CNTF with an affinity similar to that of the wild type CNTFRalpha but, when expressed as a soluble receptor subunit, lowers the binding of CNTF to its tripartite receptor. In addition, CNTFR3alpha inhibits the proliferation of the TF1 hematopoietic cell line triggered by CNTF plus soluble wild type CNTFRalpha but not by IL-6 or oncostatin M. Similarly, CNTFR3alpha specifically antagonizes the induction of gp130 and LIFRbeta tyrosine phosphorylation observed in response to CNTF and wild type soluble CNTFRalpha in the HepG2 hepatoma cell line, as well as the subsequent events leading to haptoglobin synthesis. Positions 268 and 269 of CNTFRalpha appear to be critical for its interaction with gp130 and LIFRbeta, whereby alanine substitution of the residues at these positions results in antagonism of the CNTF-induced response.