Volume-regulated anion channels (VRACs) are central to cell volume regulation. Recently identified as hetero-hexamers formed by LRRC8 proteins, their activation mechanism remains elusive. Here, we measured Förster resonance energy transfer (FRET) between fluorescent proteins fused to the C-termini of LRRC8 subunits. Inter-subunit FRET from LRRC8 complexes tracked VRAC activation. With patch-clamp fluorometry, we confirmed that the cytoplasmic domains rearrange during VRAC opening. With these FRET reporters, we determined VRAC activation, non-invasively, in live cells and their subcompartments. Reduced intracellular ionic strength did not directly activate VRACs, and VRACs were not activated on endomembranes. Instead, pharmacological manipulation of diacylglycerol (DAG), and protein kinase D (PKD) activity, activated or inhibited plasma membrane-localized VRACs. Finally, we resolved previous contradictory reports concerning VRAC activation, using FRET to detect robust activation by PMA that was absent during whole-cell patch clamp. Overall, non-invasive VRAC measurement by FRET is an essential tool for unraveling its activation mechanism.