Human dopamine receptor D4 (DRD4), a member of G-protein coupled receptor (GPCR) family, plays a central role in cell signaling and trafficking. Dysfunctional activity of DRD4 can lead to several psychiatric conditions and, therefore, represents target for many neurological disorders. However, lack of atomic structure impairs our understanding of the mechanism regulating its activity. Here, we report the modeled structure of DRD4 alone and in complex with dopamine and spiperone, its natural agonist and antagonist, respectively. To assess the conformational dynamics induced upon ligand binding, all-atom explicit solvent molecular dynamics simulations in membrane environment were performed. Comprehensive analyses of simulations reveal that agonist binding triggers a series of conformational changes in the transmembrane region, including rearrangement of residues, characteristic of transmission and tyrosine toggle molecular switches. Further, the trajectories indicate that a loop region in the intracellular region--ICL3, is significantly dynamic in nature, mainly due to the side-chain movements of conserved proline residues involved in SH3 binding domains. Interestingly, in dopamine-bound receptor simulation, ICL3 represents an open conformation ideal for G protein binding. The structural and dynamical information presented here suggest a mode of activation of DRD4, upon ligand binding. Our study will help in further understanding of receptor activation, as acquiring structural information is crucial for the design of highly selective DRD4 ligands.