Ligand-independent signaling by the angiotensin II type 1 receptor (AT1R) can be activated in clinical settings by mechanical stretch and autoantibodies as well as receptor mutations. Transition of the AT1R to the activated state is known to lower inverse agonistic efficacy of clinically used AT1R blockers (ARBs). The structure-function basis for reduced efficacy of inverse agonists is a fundamental aspect that has been understudied not only in relation to the AT1R but also regarding other homologous receptors. Here, we demonstrate that the active-state transition in the AT1R indeed attenuates an inverse agonistic effect of four biphenyl-tetrazole ARBs through changes in specific ligand-receptor interactions. In the ground state, tight interactions of four ARBs with a set of residues (Ser109(TM3), Phe182(ECL2), Gln257(TM6), Tyr292(TM7), and Asn295(TM7)) results in potent inverse agonism. In the activated state, the ARB-AT1R interactions shift to a different set of residues (Val108(TM3), Ser109(TM3), Ala163(TM4), Phe182(ECL2), Lys199(TM5), Tyr292(TM7), and Asn295(TM7)), resulting in attenuated inverse agonism. Interestingly, V108I, A163T, N295A, and F182A mutations in the activated state of the AT1R shift the functional response to the ARB binding toward agonism, but in the ground state the same mutations cause inverse agonism. Our data show that the second extracellular loop is an important regulator of the functional states of the AT1R. Our findings suggest that the quest for discovering novel ARBs, and improving current ARBs, fundamentally depends on the knowledge of the unique sets of residues that mediate inverse agonistic potency in the two states of the AT1R.