Membrane lipids are potent modulators of the nicotinic acetylcholine receptor (nAChR) from Torpedo. Lipids influence nAChR function by both conformational selection and kinetic mechanisms, stabilizing varying proportions of activatable versus non-activatable conformations, as well as influencing the transitions between these conformational states. Of note, some membranes stabilize an electrically silent uncoupled conformation that binds agonist but does not undergo agonist-induced conformational transitions. The uncoupled nAChR, however, does transition to activatable conformations in relatively thick lipid bilayers, such as those found in lipid rafts. In this review, we discuss current understanding of lipid-nAChR interactions in the context of increasingly available high resolution structural and functional data. These data highlight different sites of lipid action, including the lipid-exposed M4 transmembrane α-helix. Current evidence suggests that lipids alter nAChR function by modulating interactions between M4 and the adjacent transmembrane α-helices, M1 and M3. These interactions have also been implicated in both the folding and trafficking of nAChRs to the cell surface. We review current mechanistic understanding of lipid-nAChR interactions, and highlight potential biological roles for lipid-nAChR interactions in modulating the synaptic response. This article is part of a Special Issue entitled: Lipid-protein interactions.