Macrophage receptor with collagenous structure (MARCO) is a class A scavenger receptor (cA‐SR) that recognizes and phagocytoses a wide variety of pathogens. Most cA‐SRs that contain a C‐terminal scavenger receptor cysteine‐rich (SRCR) domain use the proximal collagenous domain to bind ligands. In contrast, the role of the SRCR domain of MARCO in phagocytosis, adhesion and pro‐inflammatory signaling is less clear. The discovery of a naturally occurring transcript variant lacking the SRCR domain, MARCOII, provided the opportunity to study the role of the SRCR domain of MARCO. We tested whether the SRCR domain is required for ligand binding, promoting downstream signaling and enhancing cellular adhesion. Unlike cells expressing full‐length MARCO, ligand binding was abolished in MARCOII‐expressing cells. Furthermore, co‐expression of MARCO and MARCOII impaired phagocytic function, indicating that MARCOII acts as a dominant‐negative variant. Unlike MARCO, expression of MARCOII did not enhance Toll‐like receptor 2 (TLR2)‐mediated pro‐inflammatory signaling in response to bacterial stimulation. MARCO‐expressing cells were more adherent and exhibited a dendritic‐like phenotype, whereas MARCOII‐expressing cells were less adherent and did not exhibit changes in morphology. These data suggest the SRCR domain of MARCO is the key domain in modulating ligand binding, enhancing downstream pro‐inflammatory signaling and MARCO‐mediated cellular adhesion.