The nicotinic acetylcholine receptor exhibits multiple conformational states, resting (channel closed), active (channel open) and desensitized (channel closed). The resting state may be distinguished from the active and desensitized states by the orientation of loop C in the extracellular ligand binding domain (LBD). Homology modeling was used to generate structures of the Torpedo californica α2βδγ nAChR that initially represent the resting state (loop C open) and the desensitized state (loop C closed). Molecular dynamics (MD) simulations were performed on the extracellular LBD on each nAChR conformational state, with and without the agonist anabaseine present in each binding site (the αγ and the αδ sites). Three MD simulations of 10ns each were performed for each of the four conditions. Comparison of dynamics revealed that in the presence of agonist, loop C was drawn inward and attains a more stable conformation. Examination of side-chain interactions revealed that residue αY190 exhibited hydrogen-bonding interactions either with residue αY93 in the ligand binding site or with residue αK145 proximal to the binding site. αK145 also exhibited side chain (salt bridge) interactions with αD200 and main chain interactions with αY93. Residues αW149, αY198, γY116/δT119, γL118/δL121 and γL108/δL111 appear to play the role of stabilizing ligand in the binding site. In MD simulations for the desensitized state, the effect of ligand upon the interactions among αK145, αY190, and αY93 as well as ligand-hydrogen-bonding to αW149 were more pronounced at the αγ interface than at the αδ interface. Differences in affinity for the desensitized state were determined experimentally to be 10-fold. The changes in side chain interactions observed for the two conformations and induced by ligand support a model wherein hydrogen bond interactions between αD200 and αY93 are broken and rearrange to form a salt-bridge between αK145 and αD200 and hydrogen bond interactions between αY93 and αY190 and between αK145 and αY190.