G protein-coupled receptors are the largest and pharmacologically most important receptor family and are involved in the regulation of most cell functions. Most of them reside exclusively at the cell surface, from where they signal via heterotrimeric G proteins to control the production of second messengers such as cAMP and IP3 as well as the activity of several ion channels. However, they may also internalize upon agonist stimulation or constitutively reside in various intracellular locations. Recent evidence indicates that their function differs depending on their precise cellular localization. This is because the signals they produce, notably cAMP and Ca2+, are mostly bound to cell proteins that significantly reduce their mobility, allowing the generation of steep concentration gradients. As a result, signals generated by the receptors remain confined to nanometer-sized domains. We propose that such nanometer-sized domains represent the basic signaling units in a cell and a new type of target for drug development.