Lysophosphatidic acid (LPA) receptor 1 (LPA1) is a member of the G protein-coupled receptors mediating the biological response to LPA species. Lack of detailed mechanism underlying LPA/LPA1 interaction has hampered the development of specific antagonists. Here, novel N-terminal Lys39 has been identified as a key residue during LPA-type agonist binding and LPA1 activation. Analysis of the molecular dynamics (MD) trajectories showed that LPA-type agonist but not VPC-32183 (antagonist) evolved structures with classical GPCR activation signatures such as reduced cytoplasmic transmembrane (TM) 3/TM6 dynamic network, ruptured ionic lock, and formation of a continuous and highly ordered internal water pathway was also observed. In activated state, LPA-type agonists interact with Arg124 (R3.28), Gln125 (Q3.29), Lys294 (K7.36) and a novel N-terminal Lys39. Site-directed mutagenesis showed complete loss of intracellular calcium mobilization in B103 cells expressing R3.28A and Lys39Ala when treated with LPA-type agonists. Structurally, LPA-type agonist via Carbonyl-oxygen/Lys39 interaction facilitated the formation of a hypothetical N-terminal cap tightly packed over LPA1 heptahelical bundle. This packing may represent a key mechanism to distinguish an apo-receptor from bound LPA1.