The V2 vasopressin receptor (V2R) is a class A G protein-coupled receptor (GPCR) and plays a vital role in controlling water homeostasis upon stimulation by the natural peptide arginine vasopressin (AVP). Thus, V2R has attracted intense interest as a drug target for diabetes insipidus, nocturia, and hyponatremia. However, how AVP recognizes and activates V2R remains elusive. Here, we report the 2.6 Å resolution structure of V2R bound to AVP and the stimulatory G protein Gs, determined by cryo-electron microscopy (cryo-EM). In this complex, AVP presents a unique cyclic conformation formed by an intramolecular disulfide bond and engages the orthosteric binding pocket of V2R in a ligand-specific mode. Comparison of the AVP–V2R–Gs complex to previously reported Gs-coupled class A GPCRs reveals distinct structural features, including a smaller outward movement of TM5 and TM6 and the concomitant shift of Gs protein. Our detailed structural analysis provides a framework for understanding AVP recognition and V2R activation, thereby offering a structural template for drug design targeting V2R.