Recently, we showed that TSH-enhanced differentiation of a human preosteoblast-like cell model involved a β-arrestin 1 (β-Arr 1)-mediated pathway. To study this pathway in more detail, we sought to discover a small molecule ligand that was functionally selective toward human TSH receptor (TSHR) activation of β-Arr 1. High-throughput screening using a cell line stably expressing mutated TSHRs and mutated β-Arr 1 (DiscoverX1 cells) led to the discovery of agonists that stimulated translocation of β-Arr 1 to the TSHR, but did not activate Gs-mediated signaling pathways, i.e., cAMP production. D3-βArr (NCGC00379308) was selected. In DiscoverX1 cells, D3-βArr stimulated β-Arr 1 translocation with a 5.1-fold greater efficacy than TSH and therefore potentiated the effect of TSH in stimulating β-Arr 1 translocation. In human U2OS-TSHR cells expressing wild-type TSHRs, which is a model of human preosteoblast-like cells, TSH upregulated the osteoblast-specific genes osteopontin (OPN) and alkaline phosphatase (ALPL). D3-βArr alone had only a weak effect to upregulate these bone markers, but D3-βArr potentiated TSH-induced upregulation of ALPL and OPN mRNA levels 1.6-fold and 5.5-fold, respectively, at the maximum dose of ligands. Furthermore, the positive allosteric modulator effect of D3-βArr resulted in an increase of TSH-induced secretion of OPN protein. In summary, we have discovered the first small molecule positive allosteric modulator of TSHR. As D3-βArr potentiates the effect of TSH to enhance differentiation of a human preosteoblast in an in vitro model, it will allow a novel experimental approach for probing the role of TSH-induced β-Arr 1 signaling in osteoblast differentiation.