Cys-loop neurotransmitter-gated ion channels are vital for communication throughout the nervous system. Following activation, these receptors enter into a desensitized state in which the ion channel shuts even though the neurotransmitter molecules remain bound. To date, the molecular determinants underlying this most fundamental property of Cys-loop receptors have remained elusive. Here we present a generic mechanism for the desensitization of Cys-loop GABAA (GABAARs) and glycine receptors (GlyRs), which both mediate fast inhibitory synaptic transmission. Desensitization is regulated by interactions between the second and third transmembrane segments, which affect the ion channel lumen near its intracellular end. The GABAAR and GlyR pore blocker picrotoxin prevented desensitization, consistent with its deep channel-binding site overlapping a physical desensitization gate.