RGS proteins serve as GTPase-activating proteins and/or effector antagonists to modulate Galpha signaling events. In live cells, members of the B/R4 subfamily of RGS proteins selectively modulate G protein signaling depending on the associated receptor (GPCR). Here we examine whether GPCRs selectively recruit RGS proteins to modulate linked G protein signaling. We report the novel finding that RGS2 binds directly to the third intracellular (i3) loop of the G(q/11)-coupled M1 muscarinic cholinergic receptor (M1 mAChR; M1i3). This interaction is selective because closely related RGS16 does not bind M1i3, and neither RGS2 nor RGS16 binds to the G(i/o)-coupled M2i3 loop. When expressed in cells, RGS2 and M1 mAChR co-localize to the plasma membrane whereas RGS16 does not. The N-terminal region of RGS2 is both necessary and sufficient for binding to M1i3, and RGS2 forms a stable heterotrimeric complex with both activated G(q)alpha and M1i3. RGS2 potently inhibits M1 mAChR-mediated phosphoinositide hydrolysis in cell membranes by acting as an effector antagonist. Deletion of the N terminus abolishes this effector antagonist activity of RGS2 but not its GTPase-activating protein activity toward G(11)alpha in membranes. These findings predict a model where the i3 loops of GPCRs selectively recruit specific RGS protein(s) via their N termini to regulate the linked G protein. Consistent with this model, we find that the i3 loops of the mAChR subtypes (M1-M5) exhibit differential profiles for binding distinct B/R4 RGS family members, indicating that this novel mechanism for GPCR modulation of RGS signaling may generally extend to other receptors and RGS proteins.