The stabilization of different active conformations of G protein–coupled receptors is thought to underlie the varying efficacies of biased and balanced agonists. Here, profiling the activation of signal transducers by angiotensin II type 1 receptor (AT1R) agonists revealed that the extent and kinetics of β-arrestin binding exhibited substantial ligand-dependent differences, which were lost when receptor internalization was inhibited. When AT1R endocytosis was prevented, even weak partial agonists of the β-arrestin pathway acted as full or near-full agonists, suggesting that receptor conformation did not exclusively determine β-arrestin recruitment. The ligand-dependent variance in β-arrestin translocation was much larger at endosomes than at the plasma membrane, showing that ligand efficacy in the β-arrestin pathway was spatiotemporally determined. Experimental investigations and mathematical modeling demonstrated how multiple factors concurrently shaped the effects of agonists on endosomal receptor–β-arrestin binding and thus determined the extent of functional selectivity. Ligand dissociation rate and G protein activity had particularly strong, internalization-dependent effects on the receptor–β-arrestin interaction. We also showed that endocytosis regulated the agonist efficacies of two other receptors with sustained β-arrestin binding: the V2 vasopressin receptor and a mutant β2-adrenergic receptor. In the absence of endocytosis, the agonist-dependent variance in β-arrestin2 binding was markedly diminished. Our results suggest that endocytosis determines the spatiotemporal bias in GPCR signaling and can aid in the development of more efficacious, functionally selective compounds.