The objective of this study was to understand the mechanisms involved in P2X₇ receptor activation. Treatments with ATP or with the P2X₇ receptor-specific ligand 2′,3′-O-(4-benzoylbenzoyl)adenosine 5′-triphosphate (BzATP) induced pore formation, but the effect was slower in CaSki cells expressing endogenous P2X₇ receptor than in human embryonic kidney (HEK)-293 cells expressing exogenous P2X₇ receptor (HEK-293-hP2X₇-R). In both types of cells Western blots revealed expression of three forms of the receptor: the functional 85-kDa form present mainly in the membrane and 65- and 18-kDa forms expressed in both the plasma membrane and the cytosol. Treatments with ATP transiently decreased the 85-kDa form and increased the 18-kDa form in the membrane, suggesting internalization, degradation, and recycling of the receptor. In CaSki cells ATP stimulated phosphorylation of the 85-kDa form on tyrosine and serine residues. Phosphorylation on threonine residues increased with added ATP, and it increased ATP requirements for phosphorylation on tyrosine and serine residues, suggesting a dominant-negative effect. In both CaSki and in HEK-293-hP2X₇-R cells ATP also increased binding of the 85-kDa form to G protein-coupled receptor kinase (GRK)-3, β-arrestin-2, and dynamin, and it stimulated β-arrestin-2 redistribution into submembranous regions of the cell. These results suggest a novel mechanism for P2X₇ receptor action, whereby activation involves a GRK-3-, β-arrestin-2-, and dynamin-dependent internalization of the receptor into clathrin domains, followed in part by receptor degradation as well as receptor recycling into the plasma membrane.