In the current model of receptor activation, the given hormone is not involved in the conversion of the inactive receptor (R) to the fully active state (R*). Rather, it preferentially selects the activated receptor conformation, thereby shifting the equilibrium toward R*. The hormone angiotensin II (Ang II) contains two residues, Tyr4 and Phe8, that are essential for agonism. We show that the conserved Asn111 in transmembrane helix III of the AT1 angiotensin receptor directly interacts with the Tyr4 side chain. A decrease in the size of the Asn111 side chain induces an intermediate activated receptor conformation (R'). The Ang II analogue [Sar1,Ile4,Ile8]Ang II fully activates the N111G mutant, indicating that either the transition from R' to R* or the stabilization of the R* state requires binding by Ang II but not its Tyr4 and Phe8 side chains. In contrast, [Sar1,Ile4,Ile8]Ang II binds to but does not activate the wild-type AT1 receptor (R), suggesting that in the wild-type receptor spontaneous occurrence of R' and R* states is rare. Thus, Ang II through interactions involving Tyr4 and Phe8 induces a transition from R to R' and through unspecified interactions induces transition from R' to R* states rather than stabilizing the spontaneously generated R* state by "conformational, selection".