GABA-A and glycine receptors are ligand-gated ion channels belonging to the Cys-loop superfamily. They mediate fast synaptic inhibition in the central nervous system. Because excitatory and inhibitory inputs are integrated by the neurone, the time course of the decay of the synaptic currents determines for how long they can shape neuronal activity. We recently showed (1) that intracellular chloride affects the time course of deactivation of these channels. The structural basis for this effect is unknown. The aim of the present work was to identify the residues that are involved in “sensing” the intracellular chloride concentration and transducing its effect. We used the rapid concentration jump technique to apply brief pulses (1-3 ms) of saturating glycine or GABA to outside-out patches to mimic synaptic-like currents. The time course of the decay of the current was measured in the presence of two different concentrations of chloride in the (intracellular) pipette solution (130mM or 10mM). Patches were obtained from transiently-transfected HEK cells expressing alpha1 or alpha1 beta glycine receptors or alpha1 beta2 gamma2L GABA-A receptors. In principle, the effect of intracellular chloride could be mediated either by residues in intracellular loops, such as M1-M2 and M3-M4, or by the residues lining the pore. We used a combination of deletion and Ala/Cys-scanning mutagenesis approaches to address this question. The M3-M4 intracellular domain of the alpha1 Gly homomeric channel was substituted with the equivalent domain (7 amino acids) from the prokaryotic orthologous channel Gloeobacter violaceus. This chimeric receptor retained modulation by intracellular chloride, suggesting that the major cytoplasmic domain is not essential for this effect. Conversely, we found that mutations along the permeation pathway reduced the difference between the deactivation rates measured at low and high intracellular chloride concentrations.