Abstract The discovery of oncogenic driver mutations and the subsequent developments in targeted therapies have led to improved outcomes for subsets of lung cancer patients. The identification of additional oncogenic and drug-sensitive alterations may similarly lead to new therapeutic approaches for lung cancer. We identify and characterize novel FGFR2 extracellular domain insertion mutations and demonstrate that they are both oncogenic and sensitive to inhibition by FGFR kinase inhibitors. We demonstrate that the mechanism of FGFR2 activation and subsequent transformation is mediated by ligand-independent dimerization and activation of FGFR2 kinase activity. Both FGFR2-mutant forms are predominantly located in the endoplasmic reticulum and Golgi but nevertheless can activate downstream signaling pathways through their interactions with fibroblast growth factor receptor substrate 2 (FRS2). Our findings provide a rationale for therapeutically targeting this unique subset of FGFR2-mutant cancers as well as insight into their oncogenic mechanisms. Cancer Res; 75(15); 3139–46. ©2015 AACR.