Hormones, sensory stimuli, neurotransmitters and chemokines signal by activating G-protein-coupled receptors (GPCRs) [1]. Although GPCRs are thought to function as monomers, they can form SDS-resistant dimers, and coexpression of two non-functional or related GPCRs can result in rescue of activity or modification of function [2-10]. Furthermore, dimerization of peptides corresponding to the third cytoplasmic loops of GPCRs increases their potency as activators of G proteins in vitro [11], and peptide inhibitors of dimerization diminish beta(2)-adrenergic receptor signaling [3]. Nevertheless, it is not known whether GPCRs exist as monomers or oligomers in intact cells and membranes, whether agonist binding regulates monomer-oligomer equilibrium, or whether oligomerization governs GPCR function. Here, we report that the alpha-factor receptor, a GPCR that is the product of the STE2 gene in the yeast Saccharomyces cerevisiae, is oligomeric in intact cells and membranes. Coexpression of receptors tagged with the cyan or yellow fluorescent proteins (CFP or YFP) resulted in efficient fluorescence resonance energy transfer (FRET) due to stable association rather than collisional interaction. Monomer-oligomer equilibrium was unaffected by binding of agonist, antagonist, or G protein heterotrimers. Oligomerization was further demonstrated by rescuing endocytosis-defective receptors with coexpressed wild-type receptors. Dominant-interfering receptor mutants inhibited signaling by interacting with wild-type receptors rather than by sequestering G protein heterotrimers. We suggest that oligomerization is likely to govern GPCR signaling and regulation.