Endocytosis of the nicotinic acetylcholine receptor (AChR) is a proposed major mechanism of neuromodulation at neuromuscular junctions and in the pathology of synapses in the central nervous system. We show that binding of the competitive antagonist alpha-bungarotoxin (alphaBTX) or antibody-mediated cross-linking induces the internalization of cell surface AChR to late endosomes when expressed heterologously in Chinese hamster ovary cells or endogenously in C2C12 myocytes. Internalization occurs via sequestration of AChR-alphaBTX complexes in narrow, tubular, surface-connected compartments, which are indicated by differential surface accessibility of fluorescently tagged alphaBTX-AChR complexes to small and large molecules and real-time total internal reflection fluorescence imaging. Internalization occurs in the absence of clathrin, caveolin, or dynamin but requires actin polymerization. alphaBTX binding triggers c-Src phosphorylation and subsequently activates the Rho guanosine triphosphatase Rac1. Consequently, inhibition of c-Src kinase activity, Rac1 activity, or actin polymerization inhibits internalization via this unusual endocytic mechanism. This pathway may regulate AChR levels at ligand-gated synapses and in pathological conditions such as the autoimmune disease myasthenia gravis.