We have studied the interaction of the reversible acetylcholine esterase inhibitor (-)physostigmine and several structurally related compounds with the nicotinic acetylcholine receptor (nAChR) from Torpedo marmorata electric tissue by means of ligand-induced ion flux into nAChR-rich membrane vesicles, direct binding studies and photoaffinity labeling. (-)Physostigmine acts as a channel-activating ligand at low concentrations and as a direct channel blocker at elevated concentrations. Channel activation is not inhibited by desensitizing concentrations of ACh or ACh-competitive ligands (including alpha-bungarotoxin and D-tubocurarine) but is inhibited by antibody FK1 and several other compounds. From photoaffinity labeling using tritiated physostigmine and mapping of the epitope for the Phy-competitive antibody FK1, the binding site for physostigmine is located within the alpha-subunit of the Torpedo nAChR and is distinct from the acetylcholine binding site. Our data suggest a second pathway of nAChR channel activation that may function physiologically as an allosteric control of receptor activity.