Biased allosteric modulators (BAMs) of G protein-coupled receptors (GPCRs) have been at the forefront of drug discovery owing to their potential to selectively stimulate therapeutically relevant signaling and avoid on-target side effects. Although structures of GPCRs in complex with G protein or GRK in a BAM-bound state have recently been resolved, revealing that BAM can induce biased signaling by directly modulating interactions between GPCRs and these two transducers, no BAM-bound GPCR-arrestin complex structure has yet been determined, limiting our understanding of the full pharmacological profile of BAMs. Herein, we developed a chemical protein synthesis strategy to generate neurotensin receptor 1 (NTSR1) with defined hexa-phosphorylation at its C-terminus and resolved high-resolution cryo-EM structures (2.65-2.88 Å) of NTSR1 in complex with both β-arrestin1 and the BAM SBI-553. These structures revealed a unique "loop engagement" configuration of β-arrestin1 coupling to NTSR1 in the presence of SBI-553, markedly different from the typical "core engagement" configuration observed in the absence of BAMs. This configuration is characterized by the engagement of the intracellular loop 3 of NTSR1 with a cavity in the central crest of β-arrestin1, representing a previously unobserved, arrestin-selective conformation of GPCR. Our findings fill the critical knowledge gap regarding the regulation of GPCR-arrestin interactions and biased signaling by BAMs, which would advance the development of safer and more efficacious GPCR-targeted therapeutics.