α3β glycine receptor (GlyR) is a subtype of the GlyRs that belongs to the Cys-loop receptor superfamily. It is a target for non-psychoactive pain control drug development due to its high expression in the spinal dorsal horn and indispensable roles in pain sensation. α3β GlyR activity is inhibited by a phosphorylation in the large internal M3/M4 loop of α3 through the prostaglandin E2 (PGE2) pathway, which can be reverted by a small molecule analgesic, 2, 6-DTBP. However, the mechanism of regulation by phosphorylation or 2, 6-DTBP is unknown. Here we show M3/M4 loop compaction through phosphorylation and 2, 6-DTBP binding, which in turn changes the local environment and rearranges ion conduction pore conformation to modulate α3β GlyR activity. We resolved glycine-bound structures of α3β GlyR with and without phosphorylation, as well as in the presence of 2, 6-DTBP and found no change in functional states upon phosphorylation, but transition to an asymmetric super open pore by 2, 6-DTBP binding. Single-molecule Förster resonance energy transfer (smFRET) experiment shows compaction of M3/M4 loop towards the pore upon phosphorylation, and further compaction by 2, 6-DTBP. Our results reveal a localized interaction model where M3/M4 loop modulate GlyR function through physical proximation. This regulation mechanism should inform on pain medication development targeting GlyRs. Our strategy allowed investigation of how post-translational modification of an unstructured loop modulate channel conduction, which we anticipate will be applicable to intrinsically disordered loops ubiquitously found in ion channels.