G protein-coupled receptors (GPCR) represent the single most important drug targets for medical therapy, and information from genome sequencing and genomic data bases has substantially accelerated their discovery. The lack of a systematic approach either to identify the function of a new GPCR or to associate it with a cognate ligand has added to the growing number of orphan receptors. In this work we provide a novel approach to this problem using a beta-arrestin2/green fluorescent protein conjugate (betaarr2-GFP). It provides a real-time and single cell based assay to monitor GPCR activation and GPCR-G protein-coupled receptor kinase or GPCR-arrestin interactions. Confocal microscopy demonstrates the translocation of betaarr2-GFP to more than 15 different ligand-activated GPCRs. These data clearly support the common hypothesis that the beta-arrestin binding of an activated receptor is a convergent step of GPCR signaling, increase by 5-fold the number of GPCRs known to interact with beta-arrestins, demonstrate that the cytosol is the predominant reservoir of biologically active beta-arrestins, and provide the first direct demonstration of the critical importance of G protein-coupled receptor kinase phosphorylation to the biological regulation of beta-arrestin activity and GPCR signal transduction in living cells. The use of betaarr2-GFP as a biosensor to recognize the activation of pharmacologically distinct GPCRs should accelerate the identification of orphan receptors and permit the optical study of their signal transduction biology intractable to ordinary biochemical methods.