Under normal conditions the brain maintains a delicate balance between inputs of reward seeking controlled by neurons containing the D1-like family of dopamine receptors and inputs of aversion coming from neurons containing the D2-like family of dopamine receptors. Cocaine is able to subvert these balanced inputs by altering the cell signaling of these two pathways such that D1 reward seeking pathway dominates. Here, we provide an explanation at the cellular and biochemical level how cocaine may achieve this. Exploring the effect of cocaine on dopamine D2 receptors function, we present evidence of σ1 receptor molecular and functional interaction with dopamine D2 receptors. Using biophysical, biochemical, and cell biology approaches, we discovered that D2 receptors (the long isoform of the D2 receptor) can complex with σ1 receptors, a result that is specific to D2 receptors, as D3 and D4 receptors did not form heteromers. We demonstrate that the σ1-D2 receptor heteromers consist of higher order oligomers, are found in mouse striatum and that cocaine, by binding to σ1 -D2 receptor heteromers, inhibits downstream signaling in both cultured cells and in mouse striatum. In contrast, in striatum from σ1 knockout animals these complexes are not found and this inhibition is not seen. Taken together, these data illuminate the mechanism by which the initial exposure to cocaine can inhibit signaling via D2 receptor containing neurons, destabilizing the delicate signaling balance influencing drug seeking that emanates from the D1 and D2 receptor containing neurons in the brain.