Phosphorylation of heptahelical receptors is thought to regulate G protein signaling, receptor endocytosis, and non-canonical signaling via recruitment of β-arrestins. We investigated chemokine receptor functionality under phosphorylation-deficient and β-arrestin-deficient conditions by studying interneuron migration in the embryonic cortex. This process depends on CXCL12, CXCR4, G protein signaling and on the atypical CXCL12 receptor ACKR3. We found that phosphorylation was crucial, whereas β-arrestins were dispensable for ACKR3-mediated control of CXCL12 levels in vivo. Cortices of mice expressing phosphorylation-deficient ACKR3 exhibited a major interneuron migration defect, which was accompanied by excessive activation and loss of CXCR4. Cxcl12-overexpressing mice mimicked this phenotype. Excess CXCL12 caused lysosomal CXCR4 degradation, loss of CXCR4 responsiveness, and, ultimately, similar motility defects as Cxcl12 deficiency. By contrast, β-arrestin deficiency caused only a subtle migration defect mimicked by CXCR4 gain of function. These findings demonstrate that phosphorylation regulates atypical chemokine receptor function without β-arrestin involvement in chemokine sequestration and non-canonical signaling.