Volatile anaesthetics have historically been considered to act in a nonspecific manner on the central nervous system. More recent studies, however, have revealed that the receptors for inhibitory neurotransmitters such as gamma-aminobutyric acid (GABA) and glycine are sensitive to clinically relevant concentrations of inhaled anaesthetics. The function of GABA(A) and glycine receptors is enhanced by a number of anaesthetics and alcohols, whereas activity of the related GABA rho1 receptor is reduced. We have used this difference in pharmacology to investigate the molecular basis for modulation of these receptors by anaesthetics and alcohols. By using chimaeric receptor constructs, we have identified a region of 45 amino-acid residues that is both necessary and sufficient for the enhancement of receptor function. Within this region, two specific amino-acid residues in transmembrane domains 2 and 3 are critical for allosteric modulation of both GABA(A) and glycine receptors by alcohols and two volatile anaesthetics. These observations support the idea that anaesthetics exert a specific effect on these ion-channel proteins, and allow for the future testing of specific hypotheses of the action of anaesthetics.