Delineation of peptide ligand binding sites is of fundamental importance in rational drug design and in understanding ligand-induced receptor activation. Molecular modeling and ligand docking to previously experimentally identified binding sites revealed a putative novel interaction between the C terminus of gonadotropin-releasing hormone (GnRH) and Arg(38(1.35)), located at the extracellular end of transmembrane domain 1 of the human GnRH receptor. Mutation of Arg(38(1.35)) to alanine resulted in 989- and 1268-fold reduction in affinity for GnRH I and GnRH II, respectively, the two endogenous ligands. Conservative mutation of Arg(38(1.35)) to lysine had less effect, giving reduced affinities of GnRH I and GnRH II by 24- and 54-fold, respectively. To test whether Arg(38(1.35)) interacts with the C-terminal Gly(10)-NH(2) of GnRH, binding of GnRH analogs with substitution of the C-terminal glycinamide with ethylamide ([Pro(9)-NHEt]GnRH) was studied with wild-type and Arg(38(1.35)) mutant receptors. Mutation of Arg(38(1.35)) to lysine or alanine had much smaller effect on receptor affinity for [Pro(9)-NHEt]GnRH analogs and no effect on binding affinity of peptide antagonist cetrorelix. In parallel with the decreased affinity, the mutants also gave a decreased potency to GnRH-elicited inositol phosphate (IP) responses. The mutant receptors had effects on [Pro(9)-NHEt]GnRH-elicited IP responses similar to that of the parent GnRHs. These findings indicate that Arg(38(1.35)) of the GnRH receptor is essential for high-affinity binding of GnRH agonists and stabilizing the receptor active conformation. The mutagenesis results support the prediction of molecular modeling that Arg(38(1.35)) interacts with the C-terminal glycinamide and probably forms hydrogen bonds with the backbone carbonyl of Pro(9) and Gly(10)-NH(2).