Bitter taste receptors (T2Rs) are a group of 25 G protein-coupled receptors (GPCRs) in humans. The cognate agonists and the mechanism of ligand binding to the majority of the T2Rs remain unknown. Here we report the first structure-function analysis of T2R7 and study the ability of this receptor to bind to different agonists by site-directed mutagenesis. Screening of ligands for T2R7 in calcium based assays lead to the identification of novel compounds that activate this receptor. Quinine, diphenidol, dextromethorphan and diphenhydramine showed substantial activation of T2R7. Interestingly, these bitter compounds showed different pharmacological characteristics. To investigate the structural features in T2R7 that might contribute to the observed differences in agonist specificities, molecular model guided ligand docking and site-directed mutagenesis was pursued. Amino acids D65, D86, W89, N167, T169, W170, S181, T255 and E271 in the ligand-binding pocket were replaced and the mutants characterized pharmacologically. Our results suggest D86, S181 and W170 present on the extracellular side of transmembrane 3 (TM3), TM5 and in extracellular loop 2 (ECL2) are essential for agonist binding in T2R7. Mutations of these amino acids lead to loss-of-function. We also identified gain-of-function residues that are agonist specific. These results suggest that agonists bind at an extracellular site rather than deep within the TM core involving residues present in both ECL2 and TM helices in T2R7. Similar to majority of the Class A GPCRs, ECL2 in T2R7 plays a significant role in agonist binding and activation.