Alternate splicing yields two distinct isoforms of the fibroblast growth factor (FGF) receptor FGFR2-IIIb and FGFR2-IIIc varying their extracellular structure in human thyroid cancer, in which FGFR expression is commonly dysregulated. In this study, we characterized the function of these variants in modulating thyroid cancer behavior. Enforced expression of either FGFR2-IIIb or FGFR2-IIIc in thyroid epithelial cancer cells reduced expression of fibronectin, MAGE-A3 and MMP9, while increasing p21 and enhancing Rb dephosphorylation. Consistent with these tumor-suppressive properties, FGFR2-IIIb and FGFR2-IIIc each diminished invasive behavior in vitro and reduced tumor growth and metastasis in vivo. Notably, these effects contrasted with those produced by expression of these FGFR isoforms in fibroblasts, in which they both stimulated cell growth. Moreover, in xenograft tumors generated by coimplantation of epithelial and fibroblast cells expressing that same isoform, there was no significant effect on tumor progression. Conversely, FGFR2-IIIb expression in epithelial cells yielded higher FGF4/FGF7 expression that, in the presence of FGFR2-IIIc-expressing fibroblasts, enhanced tumor progression. Together, our findings highlight the importance of cellular context in assigning growth properties to growth factor receptor isoforms. More specifically, they show how alternative splicing of FGFR2 yields heteroisoforms critical to the growth-promoting actions of FGFs that exert distinct epithelial-stromal effects in thyroid cancer.