Molecular dynamics simulations with experimentally derived restraints have been used to develop atomic models of M2 helix bundles forming the pore-lining domains of the nicotinic acetylcholine receptor and related ligand-gated ion channels. M2 helix bundles have been used in microscopic simulations of the dynamics and energetics of water and ions within an ion channel. Translational and rotational motion of water are restricted within the pore, and water dipoles are aligned relative to the pore axis by the surrounding helix dipoles. Potential energy profiles for translation of a Na+ ion along the pore suggest that the protein and water components of the interaction energy exert an opposing effect on the ion, resulting in a relatively flat profile which favors cation permeation. Empirical conductance calculations based on a pore radius profile suggest that the M2 helix model is consistent with a single channel conductance of ca. 50 pS. Continuum electrostatics calculations indicate that a ring of glutamate residues at the cytoplasmic mouth of the alpha 7 nicotinic receptor M2 helix bundle may not be fully ionized. A simplified model of the remainder of the channel protein when added to the M2 helix bundle plays a significant role in enhancing the ion selectivity of the channel.