Once-daily s.c. administration of either human parathyroid hormone (PTH)-(1-84) or recombinant human PTH-(1-34) provides for dramatic increases in bone mass in women with postmenopausal osteoporosis. We initiated a program to discover orally bioavailable small molecule equivalents of these peptides. A traditional high-throughput screening approach using cAMP activation of the PTH/PTH-related peptide receptor (PPR) as a readout failed to provide any lead compounds. Accordingly, we designed a new screen for this receptor that used a modified N-terminal fragment of PTH as a probe for small molecule binding to the transmembrane region of the PPR, driven by the assumption that the pharmacological properties (agonist/antagonist) of compounds that bound to this putative signaling domain of the PPR could be altered by chemical modification. We developed DPC-AJ1951, a 14 amino acid peptide that acts as a potent agonist of the PPR, and characterized its activity in ex vivo and in vivo assays of bone resorption. In addition, we studied its ability to initiate gene transcription by using microarray technology. Together, these experiments indicated that the highly modified 14 amino acid peptide induces qualitatively similar biological responses to those produced by PTH-(1-34), albeit with lower potency relative to the parent peptide. Encouraged by these data, we performed a screen of a small compound collection by using DPC-AJ1951 as the ligand. These studies led to the identification of the benzoxazepinone SW106, a previously unrecognized small molecule antagonist for the PPR. The binding of SW106 to the PPR was rationalized by using a homology receptor model.