G-protein-coupled receptors (GPCRs) are membrane proteins that transmit signals across the cell membrane by activating intracellular G-proteins in response to extracellular ligand binding. A large majority of GPCRs are characterised by an evolutionarily conserved activation mechanism, involving the re-orientation of helices and the conformation of key residue side chains, rearrangement of an internal hydrogen bonding network, and the expulsion of a sodium ion from a binding site in the transmembrane region. However, how sodium, internal water, and protein residues interplay to determine the overall receptor state remains elusive. Here, we develop and apply “State Specific Information” (SSI), a novel methodology based on information theory, to resolve signal transmission pathways through the proteins. Using all-atom molecular dynamics simulations of pharmaceutically important GPCRs, we find that sodium plays a causal role in the formation and regulation of a communication channel from the ion binding site to the G-protein binding region. Our analysis reveals that the reorientation of specific water molecules is essential to enable coupled conformational state changes of protein residues along this pathway, ultimately modulating the G-protein binding site. Furthermore, we show that protonation of the ion binding site creates a conformational coupling between two previously separate motifs, entirely controlled by the orientation of two water molecules, priming the receptor for activation. Taken together, our results demonstrate that sodium serves as a master switch, acting in conjunction with the network of internal water molecules, to determine the micro- and macrostates of GPCRs during the receptors’ transition to activation.