Hormones and many other neurotransmitters, growth factors, odorant molecules, and light all present stimuli for a class of membrane-anchored receptors called G protein-coupled receptors (GPCRs). The GPCRs are the largest family of cell-surface receptors involved in signal transduction. About 1% of all known genes of Drosophila and more than 5% of the genes of Caenorhabditis elegans encode GPCRs. In addition, more than 50% of current therapeutic agents on the market target these receptors. When the enormous biological and pharmaceutical importance of these receptors is considered, it is surprising how little is known about the mechanism with which these receptors recognize their natural ligands. In this review we present a structural approach, utilizing techniques of high-resolution NMR spectroscopy, to address the question of whether peptides from the neuropeptide Y family of neurohormones are recognized directly from solution or from the membrane-bound state. In our studies we discovered that the structures of the membrane-bound species are better correlated to the pharmacological properties of these peptides than the solution structures are. These findings are supported by the observation that many biophysical properties of these peptides seem to be optimized for membrane binding. We finally present a scenario of possible events during receptor recognition.