Fibroblast growth factor receptors (FGFRs) are a family of receptor tyrosine kinases that play key roles in proliferation, differentiation, and tumorigenesis. FGFR3 was identified as the major family member expressed in both normal human urothelium and cultured normal human urothelial (NHU) cells and was expressed as the IIIb isoform. We also identified a splice variant, FGFR3 Delta8-10, lacking exons encoding the COOH-terminal half of immunoglobulin-like domain III and the transmembrane domain. Previous reports have assumed that this is a cancer-specific splice variant. We showed that FGFR3 Delta8-10 is a normal transcript in NHU cells and is translated, N-glycosylated, and secreted. Primary urothelium expressed high levels of FGFR3 transcripts. In culture, levels were reduced in actively proliferating cells but increased at confluence and as cells approached senescence. Cells overexpressing FGFR3 IIIb showed FGF1-induced proliferation, which was inhibited by the addition of FGFR3 Delta8-10. In bladder tumor cell lines derived from aggressive carcinomas, there were significant alterations in the relative expression of isoforms including an overall decrease in the proportion of FGFR3 Delta8-10 and predominant expression of FGFR3 IIIc in some cases. In summary, alternative splicing of FGFR3 IIIb in NHU cells represents a normal mechanism to generate a transcript that regulates proliferation and in bladder cancer, the ratio of FGFR3 isoforms is significantly altered.