The GABA(A) receptor is a target of endogenous and synthetic neurosteroids. Little is known about the residues required for neurosteroid action on GABA(A) receptors. We have investigated pregnenolone sulfate (PS) inhibition of the Caenorhabditis elegans UNC-49 GABA receptor, a close homolog of the mammalian GABA(A) receptor. The UNC-49 locus encodes two GABA receptor subunits, UNC-49B and UNC-49C. UNC-49C is sensitive to PS but UNC-49B is not sensitive. By analyzing chimeric receptors and receptors containing site-directed mutations, we identified two regions required for PS inhibition. Four residues in the first transmembrane domain are required for the majority of the sensitivity to PS, but a charged extracellular residue at the end of the M2 helix also plays a role. Strikingly, mutation of one additional M1 residue reverses the effect of PS from an inhibitor to an enhancer of receptor function. Mutating the M1 domain had little effect on sensitivity to the inhibitor picrotoxin, suggesting that these residues may mediate neurosteroid action specifically, and not allosteric regulation in general.