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G-protein-coupled receptors (GPCRs) pose challenges for drug discovery efforts because of the high degree of structural homology in the orthosteric pocket, particularly for GPCRs within a single subfamily, such as the nine adrenergic receptors. Allosteric ligands may bind to less-conserved regions of these receptors and therefore are more likely to be selective. Unlike orthosteric ligands, which tonically activate or inhibit signalling, allosteric ligands modulate physiologic responses to hormones and neurotransmitters, and may therefore have fewer adverse effects. The majority of GPCR crystal structures published to date were obtained with receptors bound to orthosteric antagonists, and only a few structures bound to allosteric ligands have been reported. Compound 15 (Cmpd-15) is an allosteric modulator of the β2 adrenergic receptor (β2AR) that was recently isolated from a DNA-encoded small-molecule library1. Orthosteric β-adrenergic receptor antagonists, known as beta-blockers, are amongst the most prescribed drugs in the world and Cmpd-15 is the first allosteric beta-blocker. Cmpd-15 exhibits negative cooperativity with agonists and positive cooperativity with inverse agonists. Here we present the structure of the β2AR bound to a polyethylene glycol-carboxylic acid derivative (Cmpd-15PA) of this modulator. Cmpd-15PA binds to a pocket formed primarily by the cytoplasmic ends of transmembrane segments 1, 2, 6 and 7 as well as intracellular loop 1 and helix 8. A comparison of this structure with inactive- and active-state structures of the β2AR reveals the mechanism by which Cmpd-15 modulates agonist binding affinity and signalling.