ABSTRACT: The cannabinoid 1 (CB1) allosteric modulator, 5-chloro-3-ethyl-1H-indole-2-carboxylic acid [2-(4-piperidin-1-yl-phenyl)-ethyl]-amide) (ORG27569), has the paradoxical effect of increasing the equilibrium binding of [(3)H](-)-3-[2-hydroxyl-4-(1,1-dimethylheptyl)phenyl]-4-[3-hydroxylpropyl]cyclohexan-1-ol (CP55,940, an orthosteric agonist) while at the same time decreasing its efficacy (in G protein-mediated signaling). ORG27569 also decreases basal signaling, acting as an inverse agonist for the G protein-mediated signaling pathway. In ligand displacement assays, ORG27569 can displace the CB1 antagonist/inverse agonist, N-(piperidiny-1-yl)-5-(4-chlorophenyl)-1-(2,4-dichlorophenyl)-4-methyl-1H-pyrazole-3-carboxamide(SR141716A). The goal of this work was to identify the binding site of ORG27569 at CB1. To this end, we used computation, synthesis, mutation, and functional studies to identify the ORG27569-binding site in the CB1 TMH3-6-7 region. This site is consistent with the results of K3.28(192)A, F3.36(200)A, W5.43(279)A, W6.48(356)A, and F3.25(189)A mutation studies, which revealed the ORG27569-binding site overlaps with our previously determined binding site of SR141716A but extends extracellularly. Additionally, we identified a key electrostatic interaction between the ORG27569 piperidine ring nitrogen and K3.28(192) that is important for ORG27569 to act as an inverse agonist. At this allosteric site, ORG27569 promotes an intermediate conformation of the CB1 receptor, explaining ORG27569's ability to increase equilibrium binding of CP55,940. This site also explains ORG27569's ability to antagonize the efficacy of CP55,940 in three complementary ways. 1) ORG27569 sterically blocks movements of the second extracellular loop that have been linked to receptor activation. 2) ORG27569 sterically blocks a key electrostatic interaction between the third extracellular loop residue Lys-373 and D2.63(176). 3) ORG27569 packs against TMH6, sterically hindering movements of this helix that have been shown to be important for receptor activation.