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 α-bungarotoxin (αBTX) 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–αBTX complexes in narrow, tubular, surface-connected compartments, which are indicated by differential surface accessibility of fluorescently tagged αBTX–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. αBTX 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.