Ligand binding to G protein-coupled receptors is a complex process that involves sequential receptor conformational changes, ligand translocation, and possibly ligand-induced receptor oligomerization. Binding events at muscarinic acetylcholine receptors are usually interpreted from radioligand binding studies in terms of two-step ligand-induced receptor isomerization. We report here, using a combination of fluorescence approaches, on the molecular mechanisms for Bodipy-pirenzepine binding to enhanced green fluorescent protein (EGFP)-fused muscarinic M1 receptors in living cells. Real time monitoring, under steady-state conditions, of the strong fluorescence energy transfer signal elicited by this interaction permitted a fine kinetic description of the binding process. Time-resolved fluorescence measurements allowed us to identify discrete EGFP lifetime species and to follow their redistribution upon ligand binding. Fluorescence correlation spectroscopy, with EGFP brightness analysis, showed that EGFP-fused muscarinic M1 receptors predominate as monomers in the absence of ligand and dimerize upon pirenzepine binding. Finally, all these experimental data could be quantitatively reconciled into a three-step mechanism, with four identified receptor conformational states. Fast ligand binding to a peripheral receptor site initiates a sequence of conformational changes that allows the ligand to access to inner regions of the protein and drives ligand-receptor complexes toward a high affinity dimeric state.