The present invention makes available a rapid, reproducible, robust assay system for screening and identifying pharmaceutically effective compounds that specifically interact with and modulate the activity of a cellular protein, e.g., a receptor or ion channel. The subject assay enables rapid screening of large numbers of compounds to identify those which act as an agonist or antagonist to the bioactivity of the cellular protein. In particular, the assay of the invention makes use of a cell that harbors a protein that is responsive to a cellular signal transduction pathway. The protein is operatively linked to a polypeptide which causes a detectable signal to be generated upon stimulation of the pathway, e.g., when a compound interacts with and modulates the activity of a cellular receptor or ion channel of the cell. Thus, the cell provides a signal generation means comprising a novel fusion protein the expression of which is independent of stimulation/activation of the signal transduction pathway, but the activity of which is responsive to the signal transduction pathway.