Although dimerization appears to be a common property of G-protein-coupled receptors (GPCRs), it remains unclear whether a GPCR dimer binds one or two molecules of ligand and whether ligand binding results in activation of one or two G-proteins when measured using functional assays in intact living cells. Previously, we demonstrated that serotonin 5-hydroxytryptamine2C (5-HT2C) receptors form homodimers (Herrick-Davis, K., Grinde, E., and Mazurkiewicz, J. (2004) Biochemistry 43, 13963-13971). In the present study, an inactive 5-HT(2C) receptor was created and coexpressed with wild-type 5-HT2C receptors to determine whether dimerization regulates receptor function and to determine the ligand/dimer/G-protein stoichiometry in living cells. Mutagenesis of Ser138 to Arg (S138R) produced a 5-HT2C receptor incapable of binding ligand or stimulating inositol phosphate (IP) signaling. Confocal fluorescence imaging revealed plasma membrane expression of yellow fluorescent protein-tagged S138R receptors. Expression of wild-type 5-HT2C receptors in an S138R-expressing stable cell line had no effect on ligand binding to wild-type 5-HT2C receptors, but inhibited basal and 5-HT-stimulated IP signaling as well as constitutive and 5-HT-stimulated endocytosis of wild-type 5-HT2C receptors. M1 muscarinic receptor activation of IP production was normal in the S138R-expressing cells. Heterodimerization of S138R with wild-type 5-HT2C receptors was visualized in living cells using confocal fluorescence resonance energy transfer (FRET). FRET was dependent on the donor/acceptor ratio and independent of the receptor expression level. Therefore, inactive 5-HT2C receptors inhibit wild-type 5-HT2C receptor function by forming nonfunctional heterodimers expressed on the plasma membrane. These results are consistent with a model in which one GPCR dimer binds two molecules of ligand and one G-protein and indicate that dimerization is essential for 5-HT receptor function.