Missense mutations of fibroblast growth factor receptor 3 (FGFR3) occur in up to 80% of low-grade papillary urothelial carcinoma of the bladder (LGP-UCB) suggesting that these mutations are tumor drivers, although direct experimental evidence is lacking. Here we show that forced expression of FGFR3b-S249C, the most prevalent FGFR3 mutation in human LGP-UCB, in cultured urothelial cells resulted in slightly reduced surface translocation than wild-type FGFR3b, but nearly twice as much proliferation. When we expressed a mouse equivalent of this mutant (FGFR3b-S243C) in urothelia of adult transgenic mice in a tissue-specific and inducible manner, we observed significant activation of AKT and MAPK pathways. This was, however, not accompanied by urothelial proliferation or tumorigenesis over 12 months, due to compensatory tumor barriers in p16-pRB and p19-p53-p21 axes. Indeed, expressing FGFR3b-S249C in cultured human urothelial cells expressing SV40T, which functionally inactivates pRB/p53, markedly accelerated proliferation and cell-cycle progression. Furthermore, expressing FGFR3b-S243C in transgenic mouse urothelium expressing SV40T converted carcinoma-in-situ to high-grade papillary urothelial carcinoma. Together, our study provides new experimental evidence indicating that the FGFR3 mutations have very limited urothelial tumorigenicity and that these mutations must collaborate with other genetic events to drive urothelial tumorigenesis.