Binding of a neurotransmitter to its ionotropic receptor opens a distantly located ion channel, a process termed allosteric activation. Here we review recent advances in the molecular mechanism by which the cys-loop receptors are activated with emphasis on the best studied nicotinic acetylcholine receptors (nAChRs). With a combination of affinity labeling, mutagenesis, electrophysiology, kinetic modeling, electron microscopy (EM), and crystal structure analysis, the allosteric activation mechanism is emerging. Specifically, the binding domain and gating domain are interconnected by an allosteric activation network. Agonist binding induces conformational changes, resulting in the rotation of a β sheet of amino-terminal domain and outward movement of loop 2, loop F, and cys-loop, which are coupled to the M2-M3 linker to pull the channel to open. However, there are still some controversies about the movement of the channel-lining domain M2. Nine angstrom resolution EM structure of a nAChR imaged in the open state suggests that channel opening is the result of rotation of the M2 domain. In contrast, recent crystal structures of bacterial homologues of the cys-loop receptor family in apparently open state have implied an M2 tilting model with pore dilation and quateary twist of the whole pentameric receptor. An elegant study of the nAChR using protonation scanning of M2 domain supports a similar pore dilation activation mechanism with minimal rotation of M2. This remains to be validated with other approaches including high resolution structure determination of the mammalian cys-loop receptors in the open state.