The V2 vasopressin receptor undergoes ligand-induced sequestration and desensitization (Birnbaumer, M., Antaramian, A., Themmen, A. P. N., and Gilbert, S. (1992) J. Biol. Chem. 267, 11783-11788). The V2 receptor expressed in transfected cells labeled with [32P] orthophosphate was phosphorylated following the addition of 100 nM arginine vasopressin (AVP). Phosphorylation was complete 5 min after addition of AVP, and was not stimulated by increased levels of Ca2+ or cAMP. The half-maximal dose of AVP that stimulated phosphorylation was 2.4 +/- 0.4 nM, similar to the receptor KD of 4. 5 +/- 0.4 nM. The role of phosphorylation on receptor desensitization was investigated by studying two vasopressin receptors 14 and 27 amino acids shorter than the wild type receptor. The missing segments were not needed for normal ligand binding or coupling to Gs, but the last 14 amino acids were required for phosphorylation. The truncated receptors exposed to 100 nM AVP were sequestered and desensitized. The R137H V2R mutant receptor that binds vasopressin with wild type-like affinity and does not couple to Gs (Rosenthal, W., Antaramian, A., Gilbert, S., and Birnbaumer, M. (1993) J. Biol. Chem. 268, 13030-13033) was phosphorylated and subjected to ligand-induced sequestration. These results established that phosphorylation is not essential for sequestration and desensitization of the V2 vasopressin receptor. Furthermore, they revealed that the conformation acquired after ligand occupancy is necessary for receptor phosphorylation and sequestration, while coupling to Gs is not.