Rho 1 receptor-channels ( 1 Rs) are GABA-gated chloride channels that exhibit slow kinetics, little desensitization, and inert pharmacology to most anesthetics, except for neuroactive steroids (NSs). NSs differentially modulate 1 Rs dependent on the steric arrangement of the hydrogen atom at the fifth carbon position. In particular, the NS allotetrahydrodeoxycorticosterone (5␣-THDOC) potentiates, whereas 5-pregnane-3␣-ol-20-one (pregnanolone) and 5-dihydroprogesterone (5-DHP) inhibit 1 GABA currents. Here, we used Xenopus laevis oocytes expressing 1 Rs as a model system to study the mechanism of NS modulation. The second transmembrane residue, Ile307, was mutated to 16 amino acids. Subsequent testing of these mutants with 5␣-and 5-NSs, at equivalent GABA activity, showed the following paradigm. For 5-DHP, Ile307 mutation either altered the degree of inhibition or entirely reversed the direction of modulation, rendering 5-DHP a potentiator.Dependent on the mutation, pregnanolone remained an inhibitor, transformed into a potentiator, or converted to inhibitor and potentiator based on concentration. The extent of mode reversal for both 5 compounds showed a correlation with the side-chain hydrophilicity of the 307 residue. In contrast, Ile307 substitutions did not alter the direction of modulation for 5␣-THDOC but caused a significant increase in the level of potentiation. Paradoxical to their impact on the mode and/or the degree of modulation, none of the mutations altered the concentration range producing the response significantly for any of the above NSs. Moreover, preincubation of Ile307 mutants with 5␣ or 5 alone produced an equivalent effect on the activation time course. Based on the above data, a universal model is presented wherein anesthetic compounds like NSs can potentiate or inhibit the activity of ligand-gated ion channels distinct from interaction with alternative binding sites.