During the molecular cloning of the ovine testicular follicle-stimulating (FSH) receptor that couples to the Gs-type effector systems, we discovered novel cDNA clones that were highly homologous. Some of these clones contained an insert of 1,584 bp, which consisted of a divergent 3' region spliced with a 5' region that was identical to nucleotides 724-1,924, forming part of the 9th and 10th exons, of the coding region of the ovine FSH receptor gene. The prominence of alternately spliced clone, which suggested important functional implications, prompted this detailed investigation. Screening of the library by polymerase chain reaction and Northern analysis of testicular messenger RNA with a specific ribo-probe directed to the divergent 3' region of this transcript suggested existence of a full-length transcript of roughly 2.4 kb size. The cDNA was assembled and characterized for its structure. The predicted full-length sequence consisting of nucleotides -121-1,924 of the ovine FSH receptor and the novel 3' region (nucleotides 1,925-2,307) encoded a protein of 670 amino acids containing the entire extracellular and transmembrane domains of the ovine FSH receptor. However, a frame-shift in the coding sequence at the point of divergence resulted in a shorter (40 residues vs. 65 for ovine FSH receptor) C-terminus with three cysteine residues and a reduced number of potential phosphorylation sites. Two of the cysteine residues were adjacent and are apparently potential double palmitoylation sites compared to the single site present in the Gs coupled ovine FSH receptor. Stable expression of this novel transcript in human embryonic kidney (HEK 293) cells revealed the complete absence of cyclic AMP inducible functions, but presence of specific hormone binding activity on plasma membranes and prominent cell surface immunostaining by antireceptor antiserum. There was no alteration in hormone binding specificity because the structurally analogous luteinizing hormone (LH) did not bind to the receptor. The loss of cyclic AMP stimulation in the transfected cells was completely opposite to the properties of the cells expressing the active wild-type receptor. When cells expressing active receptors were cotransfected with the altered FSH receptor cDNA, hormone action was inhibited, suggesting that it could be functioning as a dominant negative receptor. The existence of this ovine FSH receptor with an altered carboxyl terminus predicts the utilization of an alternative splicing mechanism for regulation of receptor expression, signalling and gonadal function. Our study reveals that the modular structure of the FSH receptor gene generates motifs that allows coupling to different effectors. This could become a common feature for all glycoprotein hormone receptors.