For G-protein-coupled receptors (GPCRs) in general, the roles of extracellular residues are not well-defined compared to residues in transmembrane helices (TMs). Nevertheless, extracellular residues are important for various functions in both peptide-GPCRs and amine-GPCRs. In this study, the V1a vasopressin receptor was used to systematically investigate the role of extracellular charged residues which are highly conserved throughout a sub-family of peptide-GPCRs, using a combination of mutagenesis and molecular modelling. Of the thirteen conserved charged residues identified in the extracellular loops (ECLs), Arg116 (ECL1), Arg125 (top of TMIII) and Asp204 (ECL2) are important for agonist binding and/or receptor activation. Molecular modelling revealed that Arg125 (and Lys125) stabilizes TMIII by interacting with lipid head-groups. Charge reversal (Asp125) caused re-ordering of the lipids, altered helical packing and increased solvent penetration of the TM bundle. Interestingly, a negative charge is excluded at this locus in peptide-GPCRs whereas a positive charge is excluded in amine-GPCRs. This contrasting conserved charge may reflect differences in GPCR binding modes between peptides and amines, with amines needing to access a binding site crevice within the receptor TM bundle whereas the binding site of peptide-GPCRs comprises more extracellular domains. A conserved negative charge at residue-204 (ECL2), juxtaposed to the highly conserved disulfide bond, was essential for agonist binding and signaling. Asp204 (and Glu204) establishes TMIII contacts required for maintaining the ß-hairpin fold of ECL2, which if broken (Ala204 or Arg204) resulted in ECL2 unfolding and receptor dysfunction. This study provides mechanistic insight into the roles of conserved extracellular residues.