Defining how the agonist-receptor interaction differs from that of the antagonist-receptor and understanding the mechanisms of receptor activation are fundamental issues in cell signalling. The V1a vasopressin receptor (V1aR) is a member of a family of related G-protein coupled receptors that are activated by neurohypophysial peptide hormones, including vasopressin (AVP). It has recently been reported that an arginyl in the distal N-terminus of the V1aR is critical for binding agonists but not antagonists. To determine specific features required at this locus to support high affinity agonist binding and second messenger generation, Arg46 was substituted by all other 19 encoded amino acids. Our data establish that there is an absolute requirement for arginyl, as none of the [R46X]V1aR mutant constructs supported high affinity agonist binding and all 19 had defective signalling. In contrast, all of the mutant receptors possessed wildtype binding for both peptide and nonpeptide antagonists. The ratio of Ki to EC50, an indicator of efficacy, was increased for all substitutions. Consequently, although [R46X]V1aR constructs have a lower affinity for agonist, once AVP has bound all 19 are more likely than the wildtype V1aR to become activated. Therefore, in the wildtype V1aR, Arg46 constrains the inactive conformation of the receptor. On binding AVP this constraint is alleviated, promoting the transition to active V1aR. Our findings explain why arginyl is conserved at this locus throughout the evolutionary lineage of the neurohypophysial peptide hormone receptor family of G-protein coupled receptors.