A comprehensive deletion, mutational, and structural analysis of the native recombinant keratinocyte growth factor (KGF) polypeptide has resulted in the identification of the amino acids responsible for its biological activity. One of these KGF mutants (delta23KGF-R144Q) has biological activity comparable to the native protein, and its crystal structure was determined by the multiple isomorphous replacement plus anomalous scattering method (MIRAS). The structure of KGF reveals that it folds into a beta-trefoil motif similar to other members of fibroblast growth factor (FGF) family whose structures have been resolved. This fold consists of 12 anti-parallel beta-strands in which three pairs of the strands form a six-stranded beta-barrel structure and the other three pairs of beta-strands cap the barrel with hairpin triplets forming a triangular array. KGF has 10 well-defined beta strands, which form five double-stranded anti-parallel beta-sheets. A sixth poorly defined beta-strand pair is in the loop between residues 133 and 144, and is defined by only a single hydrogen bond between the two strands. The KGF mutant has 10 additional ordered amino terminus residues (24-33) compared to the other FGF structures, which are important for biological activity. Based on mutagenesis, thermal stability, and structural data we postulate that residues TRP125, THR126, and His127 predominantly confer receptor binding specificity to KGF. Additionally, residues GLN152, GLN138, and THR42 are implicated in heparin binding. The increased thermal stability of delta23KGF-R144Q can structurally be explained by the additional formation of hydrogen bonds between the GLN side chain and a main-chain carbonyl on an adjoining loop. The correlation of the structure and biochemistry of KGF provides a framework for a rational design of this potentially important human therapeutic.