G protein-coupled receptors (GPCRs) are ubiquitous transmembrane proteins and prime drug targets. Understanding the mechanisms that underlie GPCR activation has a profound impact on drug discovery and human pathophysiology. Because most insights into GPCR function originate from ensemble average studies, the mechanisms underlying the complexity and versatility of GPCRs have often remained concealed. It has been hypothesized that the functional versatility of GPCRs is encoded in their location at the plasma membrane. However, the direct observation of this hypothesis and, crucially, how functional properties emerge from it, remain elusive. Using live-cell quantitative fluorescence microscopy, we first revealed that GPCRs are organized into nanodomains at the plasma membrane and we identified their mechanism of formation. Next, we directly probed the probability of GPCR activation using conformational biosensors, and we discovered a striking spatial multimodality in activation probability. Receptors diffuse in and out of nanodomains, where their activation probability is locally enhanced. Finally, we leveraged spatially segregated GPCR activation to directly measure the equilibrium distribution of GPCR activity states. We found that the β1-adrenergic receptor, a prototypical GPCR, samples four activity states, whose distribution and molecular properties are regulated by ligands in a state-specific manner. In this work, the spatial organization of GPCRs emerges as a ’modus operandi’ for their functional versatility. In the future, the exploitation of this cellular property may allow us to develop therapeutics that target specific receptor populations to guide distinct signaling pathways.