Neurosteroids are potent neuromodulators which act in part by binding to and modifying the activity of neurotransmitter-gated channels. Pregnanolone sulfate (PAS) is an endogenous neurosteroid that inhibits NMDA receptors and is neuroprotective in vivo. To delineate the mechanism of NMDA receptor inhibition by pregnanolone sulfate we used kinetic analyses of equilibrium single-channel currents recorded from individual GluN1/GluN2A receptors. Results show that PAS (0.1 mM) reduces single-channel open probability by 50% solely by increasing approximately 5-fold the mean time spent by receptors in closed conformations. From these data we derive a kinetic scheme that summarizes the effects of PAS on single channel kinetics, accounts for the PAS effects on macroscopic responses and leads us to propose that PAS inhibits NMDA receptor activity by shifting active receptors into desensitized conformations. These findings highlight the neurosteroid inhibitory site on NMDA receptors as a valuable therapeutic target against excitotoxic pathologies including acute and chronic neurodegeneration.