Four distinct FGF receptors were cloned and characterized and it was demonstrated that the ligand binding site of FGF receptors is confined to the extracellular immunoglobulin-like (Ig)-domain 2 and 3. The Ig-domain 3 is encoded by two separate exons: exon IIIa encodes the N-terminal half, and the C-terminal half is encoded by either exon IIIb or IIIc in FGFR1 and FGFR2, whereas FGFR4 is devoid of exon IIIb. Alternative usage of exons IIIb and IIIc determine the ligand binding specificity of the receptor. To analyze the arrangement of these exons in FGFR3 we cloned the genomic sequence between exon IIIa and IIIc of FGFR3 and identified an alternative exon, corresponding to exon IIIb of the FGFR1 and FGFR2. The sequence of this exon shows Ig-domain hallmarks, 44% identity with exon IIIb of other FGF receptors and 36% identity with exon IIIc of FGFR3. Using this exon as a probe for mouse RNA as well as PCR analysis, demonstrated that exon IIIb encodes an authentic form of FGFR3 that is expressed in mouse embryo, mouse skin and mouse epidermal keratinocytes. The results demonstrate that the presence of alternative exons for Ig-domain 3 is a general phenomena in FGFR1, 2 and 3, and represents a novel genetic mechanism for the generation of receptor diversity.