The β2-adrenergic receptor (β2AR) plays important physiological roles in the heart and lung and is the primary target of β-agonists, the mainstay asthma drugs. Activation of β2AR by β-agonists is attenuated by receptor down-regulation, which ensures transient stimulation of the receptor but reduces the efficacy of β-agonists. Here we report the identification, through a functional genome-wide RNA interference (RNAi) screen, of new genes critically involved in β2AR down-regulation. We developed a lentivirus-based RNAi library consisting of 26-nt short-hairpin RNAs (shRNAs). The library was generated enzymatically from a large collection of expressed sequence tag (EST) DNAs corresponding to ∼20,000 human genes and contains on average ∼6 highly potent shRNAs (>75% knockdown efficiency) for each gene. Using this novel shRNA library, together with a robust cell model for β2AR expression, we performed fluorescence-activated cell sorting and isolated cells that, as a consequence of shRNA-mediated gene inactivation, exhibited defective agonist-induced down-regulation. The screen discovered several previously unrecognized β2AR regulators, including farnesyl diphosphate synthase (FDPS). We showed that inactivation of FDPS by shRNA, small interfering RNA, or the highly specific pharmaceutical inhibitor alendronate inhibited β2AR down-regulation. Notably, in human airway smooth muscle cells, the physiological target of β-agonists, alendronate treatment functionally reversed agonist-induced endogenous β2AR loss as indicated by an increase in cAMP production. FDPS inactivation interfered with β2AR internalization into endosomes through disrupting the membrane localization of the Rab5 small GTPase. Furthermore, Rab5 overexpression reversed the deficient receptor down-regulation induced by alendronate, suggesting that FDPS regulates receptor down-regulation in a Rab5-dependent manner. Together, our findings reveal a FDPS-dependent mechanism in the internalization and down-regulation of β2AR, identify FDPS as a potential target for improving the therapeutic efficacy of β-agonists, and demonstrate the utility of the unique EST-derived shRNA library for functional genetics studies.