Dopamine receptors (DARs) are G protein‐coupled receptors (GPCRs) that regulate diverse physiological functions and are involved in the treatment and/or etiology of many neuropsychiatric disorders including schizophrenia and substance use disorder (SUD). DARs are classified as either D1‐like (D1R and D5R) or D2‐like (D2R, D3R, and D4R) based on structural homology and pharmacological profiles. Antagonists of D2‐like DARs are currently used in the therapies for many neuropsychiatric disorders. D3R‐selective antagonists have the potential to be better therapeutics for schizophrenia or SUD as they could attenuate psychotic or drug craving symptoms without the motor side effects frequently produced by D2R‐preferring antagonists. Unfortunately, discovery of subtype‐selective compounds for the D3R and D2R has been challenging due to high sequence homology within the orthosteric binding sites of DARs. However, compounds that modulate receptor activities through interactions with less conserved allosteric sites have the potential to be highly selective. To find highly selective allosteric antagonists of the D3R, we screened the NIH Molecular Libraries Program 400,000+ small molecule library with a D3R‐mediated β‐arrestin recruitment assay. We found that one compound, MLS6357, was selective for the D3R over the D2R and D4R in several functional outputs including β‐arrestin recruitment and G‐protein activation. Radioligand binding and functional assays using closely related GPCRs revealed that MLS6357 has very limited cross‐reactivity with other GPCRs. Additionally, Schild‐type functional assays showed that MLS6357 acts as a purely non‐competitive negative allosteric modulator (NAM) of the D3R. We synthesized and characterized >60 analogs of MLS6357 using iterative medicinal chemistry approaches, which revealed structure–activity relationships and enabled further optimization of the scaffold. These efforts produced analogs that are 10‐fold and 30‐fold more potent than the parent compound in D3R‐mediated β‐arrestin recruitment and G‐protein activation assays, respectively. Moreover, some analogs appear to display functional selectivity for inhibition of G‐protein activation versus inhibition of β‐arrestin recruitment, and vice versa, and some also display inverse agonist activity. To identify the allosteric binding site for the MLS6357 scaffold on the D3R, we utilized various D3R/D2R chimeras, receptor mutants, and molecular modeling techniques to reveal and characterize receptor regions necessary for compound efficacy. Further refinement of the binding pocket for MLS6357 will inform future medicinal chemistry efforts. Ultimately, this novel scaffold may be of benefit as a pharmacological probe or therapeutic lead for D3R‐related pathophysiology.