␣-Bungarotoxin, the classic nicotinic antagonist, has high specificity for muscle type ␣1 subunits in nicotinic acetylcholine receptors. In this study, we show that an 11-amino-acid pharmatope sequence, containing residues important for ␣-bungarotoxin binding to ␣1, confers functional ␣-bungarotoxin sensitivity when strategically placed into a neuronal non-␣ subunit, normally insensitive to this toxin. Remarkably, the mechanism of toxin inhibition is allosteric, not competitive as with neuromuscular nicotinic receptors. Our findings argue that ␣-bungarotoxin binding to the pharmatope, inserted at a subunit-subunit interface diametrically distinct from the agonist binding site, interferes with subunit interface movements critical for receptor activation. Our results, taken together with the structural similarities between nicotinic and GABA A receptors, suggest that this allosteric mechanism is conserved in the Cys-loop ion channel family. Furthermore, as a general strategy, the engineering of allosteric inhibitory sites through pharmatope tagging offers a powerful new tool for the study of membrane proteins.