A novel cell-based functional assay to directly monitor G protein-coupled receptor (GPCR) activation in a high-throughput format, based on a common GPCR regulation mechanism, the interaction between β-arrestin and ligand-activated GPCR, is described. A protein-protein interaction technology, the InteraX™ system, uses a pair of inactive β-galactosidase (β-gal) deletion mutants as fusion partners to the protein targets of interest. To monitor GPCR activation, stable cell lines expressing both GPCR- and β-arrestin-β-gal fusion proteins are generated. Following ligand stimulation, β-arrestin binds to the activated GPCR, and this interaction drives functional complementation of the β-gal mutant fragments. GPCR activation is measured directly by quantitating restored β-gal activity. The authors have validated this assay system with two functionally divergent GPCRs: the β2-adrenergic amine receptor and the CXCR2 chemokine-binding receptor. Both receptors are activated or blocked with known agonists and antagonists in a dose-dependent manner. The β2-adrenergic receptor cell line was screened with the LOPAC™ compound library to identify both agonists and antagonists, validating this system for high-throughput screening performance in a 96-well microplate format. Hit specificity was confirmed by quantitating the level of cAMP. This assay system has also been performed in a high-density (384-well) microplate format. This system provides a specific, sensitive, and robust methodology for studying and screening GPCR-mediated signaling pathways.