The urokinase receptor is composed of three homologous domains based on disulfide spacing. The contribution of each domain to the binding and activation of single chain urokinase (scuPA) remains poorly understood. In the present paper we examined the role of domain II (DII) in these processes. Repositioning DII to the amino or carboxyl terminus of the molecule abolished binding of scuPA as did deleting the domain entirely. By using alanine-scanning mutagenesis, we identified a 9-amino acid continuous sequence in DII (Arg(137)-Arg(145)) required for both activities. Competition-inhibition and surface plasmon resonance studies demonstrated that mutation of Lys(139) and His(143) to alanine in soluble receptor (suPAR) reduced the affinity for scuPA approximately 5-fold due to an increase in the "off rate." Mutation of Arg(137), Arg(142), and Arg(145), each to alanine, leads to an approximately 100-fold decrease in affinity attributable to a 10-fold decrease in the apparent "on rate" and a 6-fold increase in off rate. These differences were confirmed on cells expressing variant urokinase receptor. suPAR-K139A/H143A displayed a 50% reduction in scuPA-mediated plasminogen activation activity, whereas the 3-arginine variant was unable to stimulate scuPA activity at all. Mutation of the three arginines did not affect binding of a decamer peptide antagonist of scuPA known to interact with DI and DIII. However, this mutation abolished both the binding of soluble DI to DII-III in the presence of scuPA and the synergistic activation of scuPA mediated by DI and wild type DII-DIII. These data show that DII is required for high affinity binding of scuPA and its activation. DII does not serve merely as a spacer function but appears to be required for interdomain cooperativity.