Neuronal nicotinic acetylcholine receptors (nAChRs) are ligand-gated ion channels that rapidly convert a chemical signal into an electrical signal. Although the structure of the nAChR is quite well described, the coupling between agonist binding and channel gating is still under debate. In this study, we probed local conformational transitions on the neuronal alpha4beta4 nAChR by specifically tethering a conformation-sensitive fluorescent dye on alphaG98C located on loop 5 (L5), and simultaneously monitoring fluorescence intensity and current after expression in Xenopus oocytes. The potency of acetylcholine (ACh) was significantly higher in the cysteine mutant and further increased upon tetramethylrhodamine-6-maleimide labeling, suggesting a role of L5 in binding or gating. Structural reorganizations of L5 were shown to occur upon activation, as revealed by the fluorescence intensity increase during ACh exposure. Fluorescence changes were also detected at ACh concentrations lower than needed for current activation, suggesting a movement of L5 for a closed, resting or desensitized state. The competitive antagonist dihydro-beta-erythroidine also induced a movement of L5 although at concentrations significantly higher than needed for current inhibition. Consequently L5, located inside the lumen of the pentamer, plays a role in both activation and inhibition of the nAChR.