C3, a synthetic peptide binding to the Ig1 module of the neural cell adhesion molecule (NCAM) has previously been identified and shown to inhibit NCAM homophilic binding and NCAM-mediated activation of the fibroblast growth factor (FGF) receptor (FGFR). However, C3 can also stimulate signalling on its own in a way similar to NCAM. Here we show that in the absence of NCAM, C3 can bind and activate FGFR, whereas in the presence of NCAM, C3 inhibits the NCAM-stimulated FGFR activation without activating FGFR on its own. Several competing models of FGFR activation by NCAM have been previously proposed. In one of them, the FGFR Ig2-Ig3 modules are involved in binding to NCAM, whereas in another - the FGFR "acid box" region mediates the interaction. The bi-modal effect of C3 can be explained in the context of the former model and is not consistent with the latter, thus providing evidence in support of the former model.