Eph receptor tyrosine kinases and their ligands (ephrins) are highly conserved protein families implicated in patterning events during development, particularly in the nervous system. In a number of functional studies, strict conservation of structure and function across distantly related vertebrate species has been confirmed. In this study we make use of the observation that soluble human EphA3 (HEK) exerts a dominant negative effect on somite formation and axial organization during zebrafish embryogenesis to probe receptor function. Based on exon structure we have dissected the extracellular region of EphA3 receptor into evolutionarily conserved subdomains and used kinetic BIAcore analysis, mRNA injection into zebrafish embryos, and receptor transphosphorylation analysis to study their function. We show that ligand binding is restricted to the N-terminal region encoded by exon III, and we identify an independent, C-terminal receptor- dimerization domain. Recombinant proteins encoding either region in isolation can function as receptor antagonists in zebrafish. We propose a two-step mechanism of Eph receptor activation with distinct ligand binding and ligand- independent receptor-receptor oligomerization events.