Many populations of vertebrate neurons have a membrane component that binds alpha-bungarotoxin and cholinergic ligands. Despite the abundance of this component and its similarities to nicotinic receptors, its function has remained controversial. Using a fluorescence assay, we show here that activation of the component elevates the intracellular concentration of free Ca2+, demonstrating a receptor function for the toxin-binding component. Whole-cell voltage-clamp and intracellular recordings did not detect a significant current resulting from receptor activation, possibly because the currents were small or the receptors rapidly desensitized. The rise in intracellular free Ca2+ caused by the receptor was prevented by Ca2+ channel blockers. This suggests a signaling cascade likely to have important regulatory consequences for the neuron.