GH actions are dependent on receptor dimerization. The GH receptor antagonist, B2036-PEG, has been developed for treating acromegaly. B2036 has mutations in site 1 to enhance receptor binding and in site 2 to block receptor dimerization. Pegylation (B2036-PEG) increases half-life and lowers immunogenicity, but high concentrations are required to control insulin-like growth factor-I levels. We examined antagonist structure and function and the impact of pegylation on biological efficacy. Unpegylated B2036 had a 4.5-fold greater affinity for GH binding protein (GHBP) than GH but similar affinity for membrane receptor. Pegylation substantially reduced membrane binding affinity and receptor antagonism, as assessed by a transcription assay, by 39- and 20-fold, respectively. GHBP reduced antagonist activity of unpegylated B2036 but did not effect antagonism by B2036-PEG. B2036 down-regulated receptors, and membrane binding sites doubled in the presence of dimerization-blocking antibodies, suggesting that B2036 binds to a receptor dimer. It is concluded that the high concentration requirement of B2036-PEG for clinical efficacy relates to pegylation, which decreases binding to membrane receptor but has the advantages of reduced clearance, immunogenicity, and interactions with GHBP. Our studies suggest that B2036 binds to a receptor dimer and induces internalization but not signaling.