The FSGO molecular fragment technique has been employed to perform ab-initio SCF-MO calculations on morphine and naloxone in the free-base and N-protonated forms. Particular features of electronic structure which have been investigated are molecular-orbital (MO) density distributions, energies and ordering, as well as the correlation of specific orbitals between different molecular species. It has been found that high-energy occupied and low-energy unoccupied MOS are centered on the aromatic moiety of both drugs, enabling the ring to act either as an electron donor or as an acceptor in a charge-transfer interaction. Comparison of corresponding MOS in the free base and the acid cation of both morphine and naloxone demonstrates that the field of the cationic head causes a dramatic downward shift in orbital energies. Thus in the N-protonated drugs the acceptor capability of the benzene ring is greatly enhanced at the expense of its suitability as a donor. Furthermore, the ally1 group of naloxone becomes highly activated as an electron acceptor through N-protonation. Investigation of the molecular electrostatic potential of the free-base species has revealed preferred avenues of approach for electrophilic and nucleophilic entities. However, the N-protonated species shows no regions of attraction for electrophiles. In both the free base and the acid cation, the vicinities of the nitrogen atom and the 3-hydroxy group are found to be favorably disposed for electrostatic interactions with receptor entities possessing the proper charge or polarity. Based on the findings with regard to electronic structure, a simple model has been suggested to explain the binding of morphine and naloxone at the opioid receptor.