The effects of sulfhydryl group modification on ligand binding and functional properties of the membrane-bound acetylcholine receptor from Torpedo californica have been investigated. Agonist binding kinetics were monitored by changes in fluorescence of the probe 5-(iodoacetamido)-salicylic acid which was covalently bound to the receptor after reduction of a reactive disulfide bond(s) by low concentrations of dithiothreitol. These labeling procedures did not affect either the equilibrium binding constant for [3H]acetylcholine or the number of high-affinity binding sites measured in centrifugation experiments. Further reduction of these labeled receptor preparations by higher concentrations of dithiothreitol and subsequent alkylation by excess iodoacetamide resulted in a more than 10-fold decrease in the affinity of the receptor for [3H]acetylcholine. This reduction and alkylation did not, however, radically alter the observed kinetics of acetylcholine binding. The fluorescence signal change on binding consisted of at least three phases similar to those observed for the control preparations, and the ligand concentration dependencies of the measured rate constants could be described by the same kinetic mechanism involving sequential binding of two ligand molecules and three conformational changes. Variation in the values of some of the kinetic parameters describing the formation of the monoliganded complex adequately accounted for the measured decrease in affinity for [3H]acetylcholine. Stopped-flow fluorescence experiments showed that extensive reduction and alkylation resulted in an apparent loss of the ability of the acetylcholine receptor to mediate agonist-induced cation flux. These results show that reduction of disulfide bonds by high concentrations of dithiothreitol followed by alkylation with iodoacetamide seriously perturbs receptor function although the receptor can still undergo its characteristic conformational changes on the binding of acetylcholine but with altered concentration dependence accounting for the reduced affinity for agonist.