Dithiothreitol (DTT) treatment of angiotensin II (Ang II) type 2 (AT(2)) receptor potentiates ligand binding, but the underlying mechanism is not known. Two disulfide bonds proposed in the extracellular domain were examined in this report. Based on the analysis of ligand affinity of cysteine (Cys, C) to alanine (Ala, A) substitution mutants, we provide evidence that Cys(35)-Cys(290) and Cys(117)-Cys(195) disulfide bonds are formed in the wild-type AT(2) receptor. Disruption of the highly conserved Cys(117)-Cys(195) disulfide bond linking the second and third extracellular segments leads to inactivation of the receptor. The Cys(35)-Cys(290) bond is highly sensitive to DTT. Its breakage results in an increased binding affinity for both Ang II and the AT(2) receptor-specific antagonist PD123319. Surprisingly, in the single Cys mutants, C35A and C290A, a labile population of receptors is produced which can be re-folded to high-affinity state by DTT treatment. These results suggest that the free -SH group of Cys(35) or Cys(290) competes with the disulfide bond formation between Cys(117) and Cys(195). This Cys-disulfide bond exchange results in production of the inactive population of the mutant receptors through formation of a non-native disulfide bond.