The alpha platelet derived growth factor receptor (alphaPDGFR) extracellular Immunoglobulin (Ig) like domains 1-3 contain major determinants for ligand interaction. We now report that a deletion of Ig-like loop 3, but not Ig-like loop 1 or 2, of the alphaPDGFR causes ligand-independent transformation in NIH3T3 cells. Biochemical analyses of alphaPDGFR mutants lacking Ig-like loop 3 indicate that cellular transformation is mediated by ligand-independent activation of the alphaPDGFR tyrosine kinase activity as determined by receptor autophosphorylation both in vivo and in vitro. Moreover, cross-linking analysis of alphaPDGFR mutants expressed ectopically in NIH3T3 cells indicate that deletion within extracellular domain 3 leads to ligand-independent receptor dimerization. All of these findings suggest that the Ig-like loop 3 of the alphaPDGFR contains the major determinants which inhibit receptor dimerization in the quiescent cells and that the ligand binding induces receptor activation by neutralizing the inhibitory effect of this domain.