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The differential signaling of multiple FGF ligands through a single fibroblast growth factor (FGF) receptor (FGFR) plays an important role in embryonic development. Here, we use quantitative biophysical tools to uncover the mechanism behind differences in FGFR1c signaling in response to FGF4, FGF8, and FGF9, a process which is relevant for limb bud outgrowth. We find that FGF8 preferentially induces FRS2 phosphorylation and extracellular matrix loss, while FGF4 and FGF9 preferentially induce FGFR1c phosphorylation and cell growth arrest. Thus, we demonstrate that FGF8 is a biased FGFR1c ligand, as compared to FGF4 and FGF9. Förster resonance energy transfer experiments reveal a correlation between biased signaling and the conformation of the FGFR1c transmembrane domain dimer. Our findings expand the mechanistic understanding of FGF signaling during development and bring the poorly understood concept of receptor tyrosine kinase ligand bias into the spotlight.