Expression of nicotinic acetylcholine receptor (AChR) involves complex processes including assembly of different receptor subunits into hetero-oligomers. To identify the minimal N-terminal region involved in AChR subunit association, we used a dominant negative assay. Co-expression of fragments of the alpha subunit, containing the N-terminal extracellular domain and transmembrane domain 1 (TM 1), with the parental AChR subunits in Xenopus oocytes blocked functional expression of the receptor. In contrast, co-expression of N-terminal extracellular fragments without TM1 failed to inhibit functional expression of AChRs, but altered the functional properties of co-expressed parental AChRs. Furthermore, when these alpha subunit fragments were co-expressed with the beta, gamma, and delta subunits, they were co-immunoprecipitated with a mixture of beta, gamma, and delta subunit specific antibodies. These results suggest that 'assembly signals' are confined to a local structure in the N-terminal extracellular domain. Our findings also indicate that an assembly step may be a target for genetic intervention not only to block the expression of functional receptors, but also to alter the function of the receptor.