Hemorphins are known for their role in the control of blood pressure. Recently, we revealed the positive modulation of the angiotensin II (AngII) type 1 receptor (AT1R) by LVV-hemorphin-7 (LVV-H7) in human embryonic kidney (HEK293) cells. Here, we examined the molecular binding behavior of LVV-H7 on AT1R and its effect on AngII binding using a nanoluciferase-based bioluminescence resonance energy transfer (NanoBRET) assay in HEK293FT cells, as well as molecular docking and molecular dynamics (MD) studies. Saturation and real-time kinetics supported the positive effect of LVV-H7 on the binding of AngII. While the competitive antagonist olmesartan competed with AngII binding, LVV-H7 slightly, but significantly, decreased AngII’s kD by 2.6 fold with no effect on its Bmax. Molecular docking and MD simulations indicated that the binding of LVV-H7 in the intracellular region of AT1R allosterically potentiates AngII binding. LVV-H7 targets residues on intracellular loops 2 and 3 of AT1R, which are known binding sites of allosteric modulators in other GPCRs. Our data demonstrate the allosteric effect of LVV-H7 on AngII binding, which is consistent with the positive modulation of AT1R activity and signaling previously reported. This further supports the pharmacological targeting of AT1R by hemorphins, with implications in vascular and renal physiology.