It is over forty years since the major neurotransmitters and their protein receptors were identified, and over twenty years since determination of the first amino-acid sequences of the Cys-loop receptors that recognize acetylcholine, serotonin, GABA and glycine. The last decade has seen the first structures of these proteins (and related bacterial and molluscan homologues) determined to atomic resolution. Hopefully over the next decade, more detailed molecular structures of entire Cys-loop receptors in drug-bound and drug-free conformations will become available. These, together with functional studies, will provide a clear picture of how these receptors participate in neurotransmission and how structural variations between receptor subtypes impart their unique characteristics. This insight should facilitate the design of novel and improved therapeutics to treat neurological disorders. This review considers our current understanding about the processes of agonist binding, receptor activation and channel opening, as well as allosteric modulation of the Cys-loop receptor family.