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It binds to membrane bound oxytocin receptors on the myometrium and prevents oxytocin-stimulated increases in inositol triphosphate production. This ultimately prevents release of stored calcium from the sarcoplasmic reticulum and subsequent opening of voltage gated calcium channels. This shutdown of cytosolic calcium increase prevents contractions of the uterine muscle, reducing the frequency of contractions and inducing uterine quiescence.
Atosiban has more recently been found to act as a biased ligand at oxytocin receptors. It acts as an antagonist of Gq coupling, explaining the inhibition of the inositol triphosphate pathway thought to be responsible for the effect on uterine contraction, but acts as an agonist of Gi coupling. This agonism produces a pro-inflammatory effect in the human amnion, activating pro-inflammatory signal tranducer NF-κB. It is thought that this reduces atosiban's effectiveness compared to agents which do not produce inflammation as inflammatory mediators are known to play a role in the induction of labour.