Keratinocyte growth factor (KGF) is a fibroblast growth factor (FGF) family member that acts specifically on cells of epithelial origin. Its receptor (KGFR) is a membrane-spanning tyrosine kinase, which also binds acidic FGF (aFGF) with equally high affinity, and basic FGF (bFGF) with much lower affinity. The KGFR is encoded by the bek/FGFR-2 gene, whose alternative transcript specifies a receptor with high affinity for aFGF and bFGF, but no detectable binding of KGF. The only structural difference between these two receptors is a 49-amino acid segment in the extracellular domain that is determined by single alternative exons. We report that a synthetic peptide (NH2-His199...Tyr223-COOH) corresponding to part of the predicted sequence of the KGFR alternative exon blocks KGF mitogenic activity and the interaction between KGF and its receptor. The peptide also blocks the interaction between KGF and a neutralizing monoclonal antibody raised against this growth factor. These results demonstrate that the peptide binds directly and specifically to KGF and argue that this region of the receptor constitutes part or all of the KGF binding site.