The gene for fibroblast growth factor receptor-2 (FGFR2) encodes two splice variants designated here as keratinocyte growth factor (KGFR) and bek. Their ligand-binding specificity is markedly different due to mutually exclusive alternative splicing. We asked whether alternative exon usage, in addition to influencing receptor specificity, could be correlated with transcriptional localization. This problem was studied by in situ hybridization and PCR, using probes and primers specific for the alternative exons of FGFR2. Transcripts of both variants were detected in all three germ layers within the embryonic and the extraembryonic areas of the primitive-streak embryo. The overall level of KGFR expression surpassed that of bek. The localized expression of both variant receptors was, however, more diffuse in the gastrula than later during organogenesis, when KGFR transcripts were evident mainly in epithelia, whereas bek was present in the corresponding mesenchymes. Our findings show the following: (1) Expression of both FGFR2 variants is concordant with their involvement in murine gastrulation. They may endow competence to multiple areas, which may be restricted by their more confined ligands. (2) KGFR and bek seem to have unique roles in the development of the skin and its derivatives, whereas bek is preferentially expressed during osteogenesis. The two variants share potential regions of trans regulation in the genome; hence, we suggest that alternative splicing is jointly responsible for ligand binding and spatial specificity. (3) Finally, we defined the binding specificity of KGFR and bek to various FGF. The possibility of identifying specific functional areas for certain ligand-receptor pairs is discussed.