The complement anaphylatoxin C3a and its cellular seven-transmembrane segment receptor, C3aR, are implicated in a variety of pathological inflammatory processes. C3aR is a G-protein-coupled receptor with an exceptionally large second extracellular loop of 172 amino acids. Previously reported deletion studies have shown that at least part of this region plays a critical role in binding C3a. Our data now demonstrate that five tyrosines in the second extracellular loop of the C3aR are posttranslationally modified by the addition of sulfate. Blocking sulfation by mutation of tyrosine to phenylalanine at positions 184, 188, 317, and/or 318 does not affect ligand binding or signal transduction. However, when tyrosine 174 is mutated to phenylalanine, binding of native C3a is completely blocked. This variant efficiently mobilizes calcium in response to synthetic C3a agonist peptides, but not to native C3a. This finding is consistent with a two-site model of ligand association typical of many peptide ligand-receptor interactions and identifies sulfotyrosine 174 as the critical C3a docking site. Tyrosine sulfation in the amino-terminal extracellular domain has been shown to be important in several other seven-transmembrane segment receptors. Our data now demonstrate that tyrosine sulfate in other extracellular domains can function for ligand interactions as well.