A binding pocket for thyrotropin-releasing hormone (TRH) within the transmembrane helices of the TRH receptor type 1 (TRH-R1) has been identified based on experimental evidence and computer simulations. To determine the binding site for a competitive inverse agonist, midazolam, three of the four residues that directly contact TRH and other residues that restrain TRH-R1 in an inactive conformation were screened by mutagenesis and binding assays. We found that two residues that directly contact TRH, Asn-110 in transmembrane helix 3 (3.37) and Arg-306 in transmembrane helix 7 (7.39), were important for midazolam binding but another, Tyr-282 in transmembrane helix 6 (6.51), was not. A highly conserved residue, Trp-279 in transmembrane helix 6 (6.48), which was reported to be critical in stabilizing TRH-R1 in an inactive state but not for TRH binding, was critical for midazolam binding. We used our previous model of the unoccupied TRH-R1 to generate a model of the TRH-R1/midazolam complex. The experimental results and the molecular model of the complex suggest that midazolam binds to TRH-R1 within a transmembrane helical pocket that partially overlaps the TRH binding pocket. This result is consistent with the competitive antagonism of midazolam binding. We suggest that the mechanism of inverse agonism effected by midazolam involves its direct interaction with Trp-279, which contributes to the stabilization of the inactive conformation of TRH-R1.