GPCR inhibitors are highly prevalent in modern therapeutics. However, interference with complex GPCR regulatory mechanisms leads to both therapeutic efficacy and adverse effects. Recently, the sphingosine-1-phosphate (S1P) receptor inhibitor FTY720 (also known as Fingolimod), which induces lymphopenia and prevents neuroinflammation, was adopted as a disease-modifying therapeutic in multiple sclerosis. Although highly efficacious, dose-dependent increases in adverse events have tempered its utility. We show here that FTY720P induces phosphorylation of the C-terminal domain of S1P receptor 1 (S1P₁) at multiple sites, resulting in GPCR internalization, polyubiquitinylation, and degradation. We also identified the ubiquitin E3 ligase WWP2 in the GPCR complex and demonstrated its requirement in FTY720-induced receptor degradation. GPCR degradation was not essential for the induction of lymphopenia, but was critical for pulmonary vascular leak in vivo. Prevention of receptor phosphorylation, internalization, and degradation inhibited vascular leak, which suggests that discrete mechanisms of S1P receptor regulation are responsible for the efficacy and adverse events associated with this class of therapeutics.