By binding to agonist-activated G protein-coupled receptors (GPCRs), beta-arrestins mediate homologous receptor desensitization and endocytosis via clathrin-coated pits. Recent data suggest that beta-arrestins also contribute to GPCR signaling by acting as scaffolds for components of the ERK mitogen-activated protein kinase cascade. Because of these dual functions, we hypothesized that the stability of the receptor-beta-arrestin interaction might affect the mechanism and functional consequences of GPCR-stimulated ERK activation. In transfected COS-7 cells, we found that angiotensin AT1a and vasopressin V2 receptors, which form stable receptor-beta-arrestin complexes, activated a beta-arrestin-bound pool of ERK2 more efficiently than alpha 1b and beta2 adrenergic receptors, which form transient receptor-beta-arrestin complexes. We next studied chimeric receptors in which the pattern of beta-arrestin binding was reversed by exchanging the C-terminal tails of the beta2 and V2 receptors. The ability of the V2 beta 2 and beta 2V2 chimeras to activate beta-arrestin-bound ERK2 corresponded to the pattern of beta-arrestin binding, suggesting that the stability of the receptor-beta-arrestin complex determined the mechanism of ERK2 activation. Analysis of covalently cross-linked detergent lysates and cellular fractionation revealed that wild type V2 receptors generated a larger pool of cytosolic phospho-ERK1/2 and less nuclear phospho-ERK1/2 than the chimeric V2 beta 2 receptor, consistent with the cytosolic retention of beta-arrestin-bound ERK. In stably transfected HEK-293 cells, the V2 beta 2 receptor increased ERK1/2-mediated, Elk-1-driven transcription of a luciferase reporter to a greater extent than the wild type V2 receptor. Furthermore, the V2 beta 2, but not the V2 receptor, was capable of eliciting a mitogenic response. These data suggest that the C-terminal tail of a GPCR, by determining the stability of the receptor-beta-arrestin complex, controls the extent of beta-arrestin-bound ERK activation, and influences both the subcellular localization of activated ERK and the physiologic consequences of ERK activation.