SummaryBinding of arrestin to phosphorylated G protein-coupled receptors (GPCRs) is crucial for modulating signaling. Once internalized some GPCRs may complex with arrestin, while others interact transiently; this difference affects receptor signaling and recycling. Cell-based and in vitro biophysical assays reveal the role of membrane phosphoinositides (PIPs) in arrestin recruitment and GPCR-arrestin complex dynamics. We find that GPCRs broadly stratify into two groups, one requiring PIP-binding for arrestin recruitment and one that does not. Plasma membrane PIPs potentiate an active conformation of arrestin and stabilize GPCR-arrestin complexes by promoting a receptor core-engaged state of the complex. As allosteric modulators of GPCR-arrestin complex dynamics, membrane PIPs allow for additional conformational diversity beyond that imposed by GPCR phosphorylation alone. The dependance on membrane PIPs provides a mechanism for arrestin release from transiently associated GPCRs, allowing their rapid recycling, while explaining how stably associated GPCRs are able to engage G proteins at endosomes.