The fibroblast growth factor (FGF) family plays a key role in a multitude of physiological and pathological processes. The activities of FGFs are mediated by a family of tyrosine kinase receptors, designated FGFRs. The mechanism by which FGFs induce receptor activation is controversial. Despite their structural similarity, FGFs display distinct receptor binding characteristics and cell type specificity. Previous studies with FGF-2 identified a low affinity receptor binding site that is located within a loop connecting its 9th and 10th beta-strands. The corresponding residues in the other family members are highly variable, and it was proposed that the variability might confer on FGFs unique receptor binding characteristics. We studied the role of this loop in FGF-7 by both site-directed mutagenesis and loop replacement. Unlike the other members of the FGF family, FGF-7 recognizes only one FGFR isoform and is, therefore, ideal for studies of how the specificity in the FGF-FGFR interaction is conferred at the structural level. Point mutations in the loop of FGF-7 did not change receptor binding affinity but resulted in reduced mitogenic potency and reduced ability to induce receptor-mediated phosphorylation events. These results suggest that the loop of FGF-7 fulfills the role of low affinity binding site required for receptor activation. The observation that it is possible to uncouple FGF-7 receptor binding and biological activity favors a bivalent model for FGFR dimerization, and it may be clinically relevant to the design of FGF-7 antagonists. Reciprocal loop replacement between FGF-7 and FGF-2 had no effect on their known receptor binding affinities nor did it alter their known specificity in eliciting a mitogenic response. In conclusion, these results suggest that, despite the diversity in the loop structure of FGF-2 and FGF-7, the loop has a similar function in both growth factors.