The nicotinic acetylcholine receptor (AChR) is a pentameric transmembrane protein (alpha 2 beta gamma delta) that binds the neurotransmitter acetylcholine (ACh) and transduces this binding into the opening of a cation selective channel. The agonist, competitive antagonist, and snake toxin binding functions of the AChR are associated with the alpha subunit (Kao et al., 1984; Tzartos and Changeux, 1984; Wilson et al., 1985; Kao and Karlin, 1986; Pederson et al., 1986). We used site-directed mutagenesis and expression of AChR in Xenopus oocytes to identify amino acid residues critical for ligand binding and channel activation. Several mutations in the alpha subunit sequence were constructed based on information from sequence homology and from previous biochemical (Barkas et al., 1987; Dennis et al., 1988; Middleton and Cohen, 1990) and spectroscopic (Pearce and Hawrot, 1990; Pearce et al., 1990) studies. We have identified one mutation, Tyr190 to Phe (Y190F), that had a dramatic effect on ligand binding and channel activation. These mutant channels required more than 50-fold higher concentrations of ACh for channel activation than did wild type channels. This functional change is largely accounted for by a comparable shift in the agonist binding affinity, as assessed by the ability of ACh to compete with alpha-bungarotoxin binding. Other mutations at nearby conserved positions of the alpha subunit (H186F, P194S, Y198F) produce less dramatic changes in channel properties. Our results demonstrate that ligand binding and channel gating are separable properties of the receptor protein, and that Tyr190 appears to play a specific role in the receptor site for acetylcholine.