Fibroblast growth factors play important roles in angiogenesis, but their functions in lymphangiogenesis remain poorly understood. The homeodomain transcription factor Prox1 is essential for development of the lymphatic system by specifying lymphatic endothelial cell (LEC) fate. Here, we identify fibroblast growth factor (FGF) receptor (FGFR)-3 as a novel Prox1 target gene. Ectopic overexpression of Prox1 in blood vascular endothelial cells up-regulates FGFR-3. Prox1 induces the expression of the IIIc isoform, which we also found to be the major isoform of FGFR-3 expressed in LECs. This transcriptional activation is mediated by a direct binding of Prox1 to newly identified Prox1-response elements in the FGFR-3 promoter. Consistently, FGFR-3 is up-regulated in Prox1-positive newly formed lymphatic vessels during embryogenesis and its lymphatic-specific expression is maintained throughout development. We also found that FGF-1 and FGF-2 promote proliferation, migration, and survival of cultured LECs without involvement of vascular endothelial cell growth factor receptor-3. We show that FGF-2 binds to low- and high-affinity receptors on LECs and is efficiently internalized and processed. Moreover, functional inhibition of FGFR-3 using small interfering RNA represses LEC proliferation. Together, these results indicate that FGFR-3 is an initial target of Prox1 during the lymphatic cell fate specification and that FGF signaling may play an important role in lymphatic vessel development.