Visual arrestin modulates the intracellular response of retinal rod cells to light by specifically binding to the phosphorylated light-activated form of the photoreceptor rhodopsin (P-Rh*). In order to characterize the molecular interaction between rhodopsin and arrestin, we have studied the ability of synthetic peptides from the proposed cytoplasmic loops of rhodopsin to inhibit arrestin binding. A third cytoplasmic loop peptide competed most effectively for arrestin binding to P-Rh*, exhibiting an IC50 of 34 microM, while a first cytoplasmic loop peptide weakly inhibited binding with an IC50 of approximately 1100 microM. The first and third cytoplasmic loop peptides also inhibited P-Rh* interaction with both ARR[delta (2-16)-404], an arrestin mutant that lacks residues 2-16, and ARR[1-191], a mutant that contains only the amino half of arrestin. However, the third loop peptide had an approximately 5-fold lower affinity at inhibiting the binding of ARR[1-191] to P-Rh*. While the first and third loop peptides also inhibited arrestin binding to light-activated rhodopsin and a truncated rhodopsin lacking its C-terminal sites of phosphorylation, the peptides modestly enhanced arrestin binding to phosphorylated dark rhodopsin. These results suggest that the third and, to a lesser extent, the first cytoplasmic loops of rhodopsin may play an important role in arrestin binding to light-activated forms of rhodopsin.