To explore the structural mechanisms underlying the assembly and activation of family A GPCR dimers, we used the rat M(3) muscarinic acetylcholine receptor (M3R) as a model system. Studies with Cys-substituted mutant M3Rs expressed in COS-7 cells led to the identification of several mutant M3Rs that exclusively existed as cross-linked dimers under oxidizing conditions. The cross-linked residues were located at the bottom of transmembrane domain 5 (TM5) and within the N-terminal portion of the third intracellular loop (i3 loop). Studies with urea-stripped membranes demonstrated that M3R disulfide cross-linking did not require the presence of heterotrimeric G proteins. Molecular modeling studies indicated that the cross-linking data were in excellent agreement with the existence of a low-energy M3R dimer characterized by a TM5-TM5 interface. [(35)S]GTPγS binding/Gα(q/11) immunoprecipitation assays revealed that an M3R dimer that was cross-linked within the N-terminal portion of the i3 loop (264C) was functionally severely impaired (∼50% reduction in receptor-G-protein coupling, as compared to control M3R). These data support the novel concept that agonist-induced activation of M3R dimers requires a conformational change of the N-terminal segment of the i3 loop. Given the high degree of structural homology among family A GPCRs, these findings should be of broad significance.