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Agouti-related protein (AGRP) is a naturally occurring antagonist of melanocortin action that is thought to play an important role in the hypothalamic control of feeding behavior. The exact mechanism of AGRP and Agouti protein action has been difficult to examine, in part because of difficulties in producing homogeneous forms of these molecules that can be used for direct binding assays. In this report we describe the application of chemical protein synthesis to the construction of two novel AGRP variants. Examination of the biological activity of the AGRP variants demonstrates that a truncated variant, human AGRP(87-132), a 46-amino acid variant based on the carboxyl-terminal cysteine-rich domain of AGRP, is equipotent to an 111-amino acid variant, mouse [Leu127Pro]AGRP (mature AGRP minus its signal sequence), in its ability to dose dependently inhibit alpha-MSH-generated cAMP generation at the cloned melanocortin receptors. Furthermore, deletion of the amino-terminal portion of the full-length variant did not alter the MCR subtype specificity of AGRP(87-132). Finally, iodination of human AGRP(87-132) provided a useful reagent with which the binding properties of AGRP could be analyzed. In both conventional and photoemulsion binding studies [125I]AGRP(87-132) was observed only to bind to cells expressing melanocortin receptors MC3R, MC4R, and MC5R. These results demonstrate that the residues critical for receptor binding, alpha-MSH inhibition, and melanocortin receptor subtype specificity are all located in the carboxyl terminus of the molecule. Because [Nle4, D-Phe7] (NDP)-MSH displaces the binding of [125I]AGRP(87-132) to MCRs and AGRP(87-132) displaces the binding of [125I]NDP-MSH, we conclude that these molecules bind in a competitive fashion to melanocortin receptors.