Despite intense interest in discovering drugs that cause G-protein coupled receptors (GPCRs) to selectively stimulate or block arrestin signalling, the structural mechanism of receptor-mediated arrestin activation remains unclear(1,2). Here we reveal this mechanism through extensive atomic-level simulations of arrestin. We find that the receptor's transmembrane core and cytoplasmic tail which bind distinct surfaces on arrestin can each independently stimulate arrestin activation. We confirm this unanticipated role of the receptor core, and the allosteric coupling between these distant surfaces of arrestin, using site-directed fluorescence spectroscopy. The effect of the receptor core on arrestin conformation is mediated primarily by interactions of the intracellular loops of the receptor with the arrestin body, rather than the marked finger loop rearrangement that is observed upon receptor binding. In the absence of a receptor, arrestin frequently adopts active conformations when its own C-terminal tail is disengaged, which may explain why certain arrestins remain active long after receptor dissociation. Our results, which suggest that diverse receptor binding modes can activate arrestin, provide a structural foundation for the design of functionally selective ('biased') GPCR-targeted ligands with desired effects on arrestin signalling.