Visual arrestin plays an important role in quenching phototransduction via its ability to preferentially bind to phosphorylated light-activated rhodopsin (P-Rh*). Recently we proposed a mechanism for the binding of visual arrestin to P-Rh* that helps to explain the nature of the conformational changes in arrestin observed upon binding. This mechanism involves a multisite interaction between arrestin and P-Rh* and implies an interaction between the C-terminal and N-terminal domains of arrestin. To obtain further insight into the mechanism of arrestin-rhodopsin interaction we have characterized the ability of polyanions to inhibit the interaction of wild type and mutant arrestins to different functional forms of rhodopsin. These studies reveal that: 1) heparin is most potent at inhibiting arrestin binding to dark phosphorylated rhodopsin > light-activated rhodopsin > P-Rh*; 2) C-terminal deletions in arrestin increase arrestin sensitivity to heparin inhibition while an N-terminal deletion (residues 2-16) decreases heparin inhibition; 3) the sensitivity of chimeric arrestins to heparin inhibition is determined by the origin of the N terminus of the chimera; and 4) heparin also inhibits arrestin binding to truncated 329G-Rh*, suggesting it does not mimic the phosphorylated C terminus of rhodopsin. Taken together, these data suggest that heparin mimics the regulatory acidic C terminus of arrestin. Since the basic N-terminal region of arrestin appears to serve as a site of heparin binding it is a likely candidate to be involved in the intramolecular interaction with the C-terminal region. The interaction of the N- and C-terminal domains of arrestin may control the conformational rearrangements in arrestin that occur upon binding to P-Rh*.