For G-protein-coupled receptors (GPCRs) in general, the roles of extracellular residues are not well defined compared with residues in transmembrane helices (TMs). Nevertheless, extracellular residues are important for various functions in both peptide-GPCRs and amine-GPCRs. In this study, the V(1a) vasopressin receptor was used to systematically investigate the role of extracellular charged residues that are highly conserved throughout a subfamily of peptide-GPCRs, using a combination of mutagenesis and molecular modeling. Of the 13 conserved charged residues identified in the extracellular loops (ECLs), Arg(116) (ECL1), Arg(125) (top of TMIII), and Asp(204) (ECL2) are important for agonist binding and/or receptor activation. Molecular modeling revealed that Arg(125) (and Lys(125)) stabilizes TMIII by interacting with lipid head groups. Charge reversal (Asp(125)) caused re-ordering of the lipids, altered helical packing, and increased solvent penetration of the TM bundle. Interestingly, a negative charge is excluded at this locus in peptide-GPCRs, whereas a positive charge is excluded in amine-GPCRs. This contrasting conserved charge may reflect differences in GPCR binding modes between peptides and amines, with amines needing to access a binding site crevice within the receptor TM bundle, whereas the binding site of peptide-GPCRs includes more extracellular domains. A conserved negative charge at residue 204 (ECL2), juxtaposed to the highly conserved disulfide bond, was essential for agonist binding and signaling. Asp(204) (and Glu(204)) establishes TMIII contacts required for maintaining the beta-hairpin fold of ECL2, which if broken (Ala(204) or Arg(204)) resulted in ECL2 unfolding and receptor dysfunction. This study provides mechanistic insight into the roles of conserved extracellular residues.