The extracellular loops of G protein-coupled receptors (GPCRs) frequently contain binding sites for peptide ligands. However, the mechanism of receptor activation following ligand binding and the influence of the extracellular loops in other aspects of receptor function are poorly understood. Here we report a structure-function analysis of the first and third extracellular loops of the human C5a receptor, a GPCR that binds a 74-amino acid peptide ligand. Amino acid substitutions were randomly incorporated into each loop, and functional receptors were identified in yeast. The first extracellular loop contains a large number of positions that cannot tolerate amino acid substitutions, especially residues within the WXFG motif found in many rhodopsin-like GPCRs, yet disruption of these residues does not alter C5a binding affinity. These results demonstrate an unanticipated role for the first extracellular loop, and the WXFG motif in particular, in ligand-mediated activation of the C5a receptor. This motif likely serves a similar role in other GPCRs. The third extracellular loop, in contrast, contains far fewer preserved residues and appears to play a less essential role in receptor activation.G protein-coupled receptors (GPCRs) 2 are the largest class of membrane-bound receptors, with more than 850 members in the human genome (1). The majority of GPCRs is grouped in the rhodopsin family by the presence of a small number of conserved amino acids in the transmembrane (TM) bundle, such as the DRY motif at the cytoplasmic end of TM3 and the NPXXY motif in TM7 (2). These receptors share a similar molecular architecture within the seven-helix bundle, which was originally represented by the ␣-carbon template of the Baldwin model (3) and later confirmed by the high resolution structure of bovine rhodopsin (4). The extracellular loops, in contrast, are more divergent, both in length and function (5). Ligands frequently bind to the extracellular loops, and the variability of the loops is not surprising when considering the range of ligands known to interact with GPCRs. For many GPCRs, especially those that bind larger peptide ligands, the mechanisms by which ligand binding stimulates G protein activation and how the extracellular loops can influence receptor activation are poorly understood. Considering that more than half of all prescribed medications target GPCRs, mostly by disrupting or mimicking ligand binding (6), a better understanding of the function of the extracellular loops is extremely important.To elucidate how GPCRs function as molecular switches to transduce signals, we study the complement factor 5a receptor (C5aR), a rhodopsin-like GPCR expressed primarily on the surface of neutrophils and other myeloid cells. C5a, a 74-amino acid peptide released during complement activation, binds to C5aR and directs neutrophil chemotaxis and the release of proteolytic enzymes and superoxide (7). C5a binds to both the transmembrane bundle and the amino terminus of C5aR (8, 9), and other binding sites in the extracellular l...