Epstein-Barr virus-induced molecule 2 (EBI2) (also known as G-protein-coupled receptor 183) is a G-protein-coupled receptor (GPCR) that is best known for its role in B cell migration and localization. Our recent deorphanization effort led to the discovery of 7α,25-dihydroxycholesterol (7α,25-OHC) as the endogenous ligand for EBI2, which provides a tool for mechanistic studies of EBI2 function. Because EBI2 is the first GPCR known to bind and to be activated by an oxysterol, the goal of this study was to understand the molecular and structural bases for its ligand-dependent activation; this was achieved by identifying structural moieties in EBI2 or in 7α,25-OHC that might affect receptor-ligand interactions. By using a series of chemically related OHC analogs, we demonstrated that all three hydroxyl groups in 7α,25-OHC contributed to ligand-induced activation of the receptor. To determine the location and composition of the ligand binding domain in EBI2, we used a site-directed mutagenesis approach and generated mutant receptors with single amino acid substitutions at selected positions of interest. Biochemical and pharmacological profiling of these mutant receptors allowed for structure-function analyses and revealed critical motifs that likely interact with 7α,25-OHC. By using a hybrid β(2)-adrenergic receptor-C-X-C chemokine receptor type 4 structure as a template, we created a homology model for EBI2 and optimized the docking of 7α,25-OHC into the putative ligand binding site, so that the hydroxyl groups interact with residues Arg87, Asn114, and Glu183. This model of ligand docking yields important structural insight into the molecular mechanisms mediating EBI2 function and may facilitate future efforts to design novel therapeutic agents that target EBI2.