The fibroblast growth factor receptor 2 (FGFR2) and the keratinocyte growth factor receptor (KGFR) have different ligand binding specificities despite differing only in the second half of their immunoglobulin-like (Ig-like) domain III. Three-dimensional model structures were generated for domain III on the basis of variable (V) Ig domains. The region that differs between the two receptors is predicted to include two loops: one connects beta-strands F-G and is analogous to the complementarity determining region 3 (CDR3) of immunoglobulins; the other connects beta-strands D-E. These regions were targeted for mutagenesis. Single mutations in the F-G loop were found to only slightly alter ligand binding, whereas a double mutant, KGFR Y345-->S,Q348-->I, acquired significant affinity for bFGF. Notably, the affinity of this double mutant KGFR for KGF and aFGF was essentially unaltered. A mutant FGFR2, in which the D-E beta-hairpin (T319TDKEI) is replaced with the KGFR D-E beta-hairpin (S319SNA), has 9-fold reduced affinity for bFGF. These results demonstrate that the F-G or CDR3 analogous loop in FGFRs plays a key role in determining ligand binding and specificity. In addition, however, the protein loop connecting beta-strands D and E may also be involved in ligand binding. Several point mutations in FGFR2, shown recently to give rise to multiple inherited skeletal defects, are localized according to our models to the F-G or D-E loops of domain III. Our results strongly suggest that these naturally occurring mutations specifically alter ligand binding by FGFR2.