G protein-coupled receptors (GPCRs) are the largest superfamily of cell surface receptors and are responsible for mediating numerous physiological responses, which make them attractive drug targets. The second largest but least well-understood family of GPCRs, adhesion GPCRs (aGPCRs), have key functions in diverse biological processes including myelination, angiogenesis, neutrophil activation, synaptogenesis, and more. aGPCRs have large alternatively-spliced extracellular regions (ECRs) that mediate cell communication and may be drug targets to modulate aGPCR function. However, their structures and mechanisms of action remain unclear. The aGPCR Gpr126/ADGRG6 regulates Schwann cell myelination, heart development, and ear canal formation; and GPR126 mutations cause myelination defects in human. We determined the structure of the complete Gpr126 ECR and revealed five domains including a previously-unknown proteolytic domain. Strikingly, the Gpr126 ECR adopts a closed conformation that is stabilized by an alternatively spliced linker and a conserved calcium-binding site. Alternative splicing regulates ECR conformation and receptor signaling, while mutagenesis of the newly-characterized calcium-binding site abolishes Schwann cell myelination in transgenic zebrafish. In addition to Gpr126, we also investigated the G protein signaling of other aGPCRs, GPR56 and Lphn, which led to the development of G protein signaling assays to probe aGPCR function. Altogether, these results demonstrate that Gpr126, and likely other aGPCRs, utilize a multi-faceted dynamic approach to regulate function and provide novel insights into ECR-targeted drug design.