The GPCR relaxin family peptide receptor 1 (RXFP1) mediates the action of relaxin peptide hormone, including its tissue remodeling and antifibrotic effects. The peptide has a short half-life in plasma, limiting its therapeutic utility. However, small-molecule agonists of human RXFP1 can overcome this limitation and may provide a useful therapeutic approach, especially for chronic diseases such as heart failure and fibrosis. The first small-molecule agonists of RXFP1 were recently identified from a high-throughput screening, using a homogeneous cell-based cAMP assay. Optimization of the hit compounds resulted in a series of highly potent and RXFP1 selective agonists with low cytotoxicity, and excellent in vitro ADME and pharmacokinetic properties. Here, we undertook extensive site-directed mutagenesis studies in combination with computational modeling analysis to probe the molecular basis of the small-molecule binding to RXFP1. The results showed that the agonists bind to an allosteric site of RXFP1 in a manner that closely interacts with the seventh transmembrane domain (TM7) and the third extracellular loop (ECL3). Several residues were determined to play an important role in the agonist binding and receptor activation, including a hydrophobic region at TM7 consisting of W664, F668, and L670. The G659/T660 motif within ECL3 is crucial to the observed species selectivity of the agonists for RXFP1. The receptor binding and activation effects by the small molecule ML290 were compared with the cognate ligand, relaxin, providing valuable insights on the structural basis and molecular mechanism of receptor activation and selectivity for RXFP1.