Alcohols and volatile anesthetics modulate the function of cys-loop ligand-gated ion channels, binding to a putative site between transmembrane domains two and three. The extracellular linker between these two domains is important in the transduction of the gating signal from the glycine binding site to the channel gate. Although the anesthetic binding site is proposed to be in the same region throughout the cys-loop receptor family, the modulatory effects of these compounds depend on the receptor. A sequence comparison revealed an extra proline in the TM2-TM3 loop of the 5-HT3A receptor (5-HT3AR) that is not found in the glycine receptor (GlyR). We hypothesized that this proline residue could affect the size and orientation of the putative alcohol and anesthetic binding pocket and perhaps explain some of the differences in alcohol and anesthetic effects seen in this family of receptors. A lysine to proline mutation was introduced into the TM2-TM3 linker region at position 281 (K281P) of the alpha1 GlyR. Mutation at this residue did not affect thiol binding to residues in TM2 or TM3 and it does not appear that residue 281 constitutes part of the alcohol binding site. The K281P receptors displayed constitutive activity in the absence of glycine, and unlike wild-type receptors, this channel opening was antagonized by application of either volatile anesthetics or another GlyR modulator, zinc. Our data suggest that the TM2-TM3 extracellular loop plays a role in the transduction of signals generated by allosteric modulators in addition to gating signals that follow glycine binding.