Muscle nicotinic acetylcholine receptors (AChRs) are pentamers that contain two alpha subunits a beta, gamma (or epsilon), and delta subunit. In this paper, we have characterized subunit processing and folding events leading to formation of the two AChR ligand binding sites. alpha subunit residues, 187-199, which are part of overlapping ACh and alpha-bungarotoxin (Bgt) binding sites on AChRs, were assayed using a monoclonal antibody (mAb) specific for these residues. We found that this region was inaccessible to the mAb early during AChR assembly but became accessible as the first of two Bgt binding sites formed later during assembly, indicating that the region changes conformation as the Bgt binding site appears. Without previous reduction, 20% of the alpha subunits could be alkylated by bromoacetylcholine bromide as the first ACh binding site formed, which further indicated that the disulfide bond between cysteines 192 and 193 does not form until the first ACh binding site appears soon after Bgt binding site formation. When alpha subunits were mutated to add a glycosylation site at residue 187, the number of Bgt binding sites increased threefold, AChRs assembled more efficiently, and 2.5-fold more AChRs reached the cell surface. Our results indicate that binding site formation involves a rate-limiting rearrangement of the alpha subunit that exposes the 187-199 region to the endoplasmic reticulum lumen and determines when cysteines 192 and 193 disulfide bond.