The fungal toxin cytochalasin D (CD) interferes with normal actin cytoskeletal dynamics by binding to the barbed end of actin filaments. Despite being extensively used as a tool for studying actin-mediated processes, the exact location and nature of its binding to actin are unknown. We have determined two crystal structures of a cytoplasmic actin, engineered to remain monomeric, with CD. One was obtained by soaking actin crystals with CD, and the other by co-crystallization. The CD-binding site, in the hydrophobic cleft between actin sub-domains 1 and 3, is identical in the two structures. Polar and hydrophobic contacts play equally important roles in CD binding, with six hydrogen bonds stabilizing the actin-CD complex. While many actin-binding proteins and marine toxins target this cleft, they primarily target the front half of this cleft (viewing actin with sub-domain 2 on the upper right). CD differs in that it targets the back half of this cleft. Our analysis suggests that contacts with this region of the cleft would ensure filament capping without severing. Importantly, the actin molecule in the co-crystallized actin-CD structure shows novel conformational changes in response to ligand binding. These include an ∼6° inter-domain rotation, causing small changes in crystal packing that enables the ordering of the D-loop (DNase I-binding loop), which is disordered in most structures of actin. The D-loop adopts an extended, non-periodic conformation and is stabilized by contacts with neighboring actin monomers. Based on the shift in position of a putative nucleophilic water, we postulate a mechanism for CD-induced enhancement of actin-catalyzed ATP hydrolysis. We speculate that these changes represent a potential conformation that the actin monomer can adopt on the pathway to polymerization or in a filament.