Protease-activated receptor-2 (PAR2), a cell surface receptor for trypsin-like proteases, plays a key role in a number of acute and chronic inflammatory diseases of the joints, lungs, brain, gastrointestinal tract, and vascular systems. Despite considerable effort by the pharmaceutical industry, PAR2 has proven recalcitrant to targeting by small molecule inhibitors, which have been unable to effectively prevent the interaction of the protease-generated tethered ligand with the body of the receptor. Here, we report the development of first-in-class cell-penetrating lipopeptide "pepducin" antagonists of PAR2. The design of the third intracellular (i3) loop pepducins were based on a structural model of a PAR2 dimer and by mutating key pharmacophores in the receptor intracellular loops and analogous pepducins. Individual pharmacophores were identified, which controlled constitutive, agonist, and antagonist activities. This approach culminated in the identification of the P2pal-18S pepducin which completely suppressed trypsin and mast cell tryptase signaling through PAR2 in neutrophils and colon cancer cells. The PAR2 pepducin was highly efficacious in blocking PAR2-dependent inflammatory responses in mouse models. These effects were lost in PAR2-deficient and mast-cell-deficient mice, thereby validating the specificity of the pepducin in vivo. These data provide proof of concept that PAR2 pepducin antagonists may afford effective treatments of potentially debilitating inflammatory diseases and serve as a blueprint for developing highly potent and specific i3-loop-based pepducins for other G protein-coupled receptors (GPCRs).