The atomic-level dopamine activation mechanism for transmitting extracellular ligand binding events through transmembrane helices to the cytoplasmic G protein remains unclear. In the present study, the complete dopamine D3 receptor (D3R), with a homology-modeled N-terminus, was constructed to dock different ligands to simulate conformational alterations in the receptor's active and inactive forms during microsecond-timescale molecular dynamic simulations. In agonist-bound systems, the D3R N-terminus formed a "lid-like" structure and lay flat on the binding site opening, whereas in antagonist and inverse agonist-bound systems, the N-terminus exposed the binding cavity. Receptor activation was characterized using the different molecular switch residue distances, and G protein-binding site volumes. A continuous water pathway was observed only in the dopamine-Gαi-bound system. In the inactive D3Rs, water entry was hindered by the hydrophobic layers. Finally, a complete activation mechanism of D3R was proposed. Upon agonist binding, the "lid-like" conformation of the N-terminus induces a series of molecular switches to increase the volume of the D3R cytoplasmic binding part for G protein association. Meanwhile, water enters the transmembrane region inducing molecular switches to assist in opening the hydrophobic layers to form a continuous water channel, which is crucial for maintaining a fully active conformation for signal transduction.