Fibroblast growth factor receptor 3 (FGFR3) influences a diverse array of biological processes, including cell growth, differentiation, and migration. Activating mutations in FGFR3 are associated with multiple myeloma, cervical carcinoma, and bladder cancer. To identify proteins that interact with FGFR3 and which may mediate FGFR3-dependent signaling, a yeast two-hybrid screen was employed using the cytoplasmic kinase domain of FGFR3 as bait. We identified the adapter protein SH2-B as an FGFR3-interacting protein. Coimmunoprecipitation experiments demonstrate binding of the SH2-B beta isoform to FGFR3 in 293T cells. Tyrosine phosphorylation of SH2-B beta was observed when coexpressed with activated FGFR3 mutants such as the weakly activated mutant N540K or the strongly activated mutant K650E, both associated with human developmental syndromes. The extent of tyrosine phosphorylation of SH2-B beta correlates with receptor activation, suggesting that FGFR3 activation mediates tyrosine phosphorylation of SH2-B beta. Furthermore, two tyrosine phosphorylation sites of FGFR3, Tyr-724 and Tyr-760, are required for optimal binding of the Src homology-2 (SH2) domain of SH2-B beta. We also demonstrate the phosphorylation and nuclear translocation of Stat5 by activated FGFR3, which increases in response to overexpression of SH2-B beta. Taken together, our results identify SH2-B beta as a novel FGFR3 binding partner that mediates signal transduction.