The nicotinic acetylcholine receptor (AChR) is the archetype molecule in the superfamily of ligand-gated ion channels (LGIC). Members of this superfamily mediate fast intercellular communication in response to endogenous neurotransmitters. This review is focused on the structural and functional crosstalk between the AChR and lipids in the membrane microenvironment, and the modulation exerted by the latter on ligand binding and ion translocation. Experimental approaches using Laurdan extrinsic fluorescence and Förster-type resonance energy transfer (FRET) that led to the characterization of the polarity and molecular dynamics of the liquid-ordered phase AChR-vicinal lipids and the bulk membrane lipids, and the asymmetry of the AChR-rich membrane are reviewed first. The topological relationship between protein and lipid moieties and the changes in physical properties induced by exogenous lipids are discussed next. This background information lays the basis for understanding the occurrence of lipid sites in the AChR transmembrane region, and the selectivity of the protein-lipid interactions. Changes in FRET efficiency induced by fatty acids, phospholipid and cholesterol (Chol), led to the identification of discrete sites for these lipids on the AChR protein, and electron-spin resonance (ESR) spectroscopy has recently facilitated determination of the stoichiometry and selectivity for the AChR of the shell lipid. The influence of lipids on AChR function is discussed next. Combined single-channel and site-directed mutagenesis data fostered the recognition of lipid-sensitive residues in the transmembrane region, dissecting their contribution to ligand binding and channel gating, opening and closing. Experimental evidence supports the notion that the interface between the protein moiety and the adjacent lipid shell is the locus of a variety of pharmacologically relevant processes, including the action of steroids and other lipids.