Cell-surface-localized receptors and their extracellular ligands usually comprise distinct families and promote diversity of signal transduction regulation. The number of available ligand molecules is often the limiting factor for receptor activation during interpretation of the signal by the responding cell. Limited ligand availability in a particular area of tissue should lead to local competition between different members of a receptor family for binding and subsequent activation. Fibroblast growth factor receptor (FGFR) 4 (FGFR4) is a less potent activator of downstream pathways than FGFR1, the major subtype of FGFR. Regional expression of Xenopus FGFR1 and FGFR4 (XFGFR1 and XFGFR4, respectively) overlap in the anterior part of prospective and developing neural tissue. In this paper we show that XFGFR1 and XFGFR4 have opposing effects on the positioning of expression domains of mid- and hindbrain markers when the expression levels of the receptors are altered. We present a line of evidence to support our hypothesis that competition between XFGFR1 and XFGFR4 for ligands is required for correct positioning of marker expression. Local competition between receptors with different potencies should provide an efficient means for a cell to interpret the ligand signal correctly, and may constitute a more general mechanism for regulating signal transduction.