Ciliary neurotrophic factor (CNTF) associates with an cu subunit (CNTFR alpha) of the receptor complex to initiate signal transduction by facilitating heterodimerization of the gp130 transducing protein and the leukemia inhibitory factor receptor (LIFR) beta. CNTFR alpha is anchored to the membrane by a glycosylphosphatidylinositol Linkage; however, a soluble form of the alpha subunit can still bind CNTF to recruit the signal transducing components of the receptor complex. In the present study me show that alanine substitution for residues Thr(268) and Asp(269) of the CNTFR alpha subunit results in a mutated receptor subunit (R3), which can bind CNTF with an affinity similar to that of the wild type CNTFR alpha but, when expressed as a soluble receptor subunit, lowers the binding of CNTF to its tripartite receptor. In addition, CNTFR3 alpha inhibits the proliferation of the TF1 hematopoietic cell line triggered by CNTF plus soluble wild type CNTFR alpha but not by IL-6 or oncostatin M. Similarly, CNTFR3 alpha specifically antagonizes the induction of gp130 and LIFR beta tyrosine phosphorylation observed in response to CNTF and wild type soluble CNTFR alpha in the HepG2 hepatoma cell line, as well as the subsequent events leading to haptoglobin synthesis. Positions 268 and 269 of CNTFR alpha appear to be critical for its interaction with gp130 and LIFR beta, whereby alanine substitution of the residues at these positions results in antagonism of the CNTF-induced response.