Neurotrophin-3 binds to the receptor tyrosine kinase, TrkC. Several naturally occurring splice variants of TrkC exist including those with 14- and 39-amino acid inserts within the tyrosine kinase homology region. When expressed in fibroblasts, full-length TrkC, but not the kinase insert variants, mediated neurotrophin-3-stimulated cell proliferation. We investigated the molecular basis of this signaling defect. The kinase inserts blocked the ability of TrkC to mediate neurotrophin-3 stimulated c-myc and c-fos transcription and activation of the AP-1 transcriptional complex. In cells expressing full-length TrkC, neurotrophin-3 promoted a sustained activation of mitogen-activated protein kinase; TrkC containing kinase inserts only mediated transient activation of mitogen-activated protein kinase. The kinase inserts specifically blocked neurotrophin-3-stimulated autophosphorylation of the phospholipase C gamma binding site on TrkC (tyrosine 789) resulting in a severe reduction in phospholipase C gamma association with TrkC and its tyrosine phosphorylation. Neurotrophin-3-stimulated phosphorylation of the Shc binding site (tyrosine 485) on TrkC, and tyrosine phosphorylation of Shc itself, was unaffected by the kinase inserts; however, the kinase inserts blocked high affinity Shc association with TrkC. It is proposed that the lack of high affinity binding of Shc and/or phospholipase C gamma to the TrkC kinase insert variants may be responsible for the inability of these variants to bring about a full biological response in fibroblasts.