GABA(A) receptors have been solubilized from bovine brain membranes and, following purification by benzodiazepine affinity chromatography, have been reconstituted into phospholipid vesicles. Reconstituted vesicles were about 120 nm in diameter, and, on average, each vesicle contained fewer than one GABA(A) receptor which was reconstituted in an outside-out orientation. These preparations have been used in parallel studies of radiolabeled ligand binding and chloride flux, the latter being measured by following the fluorescence changes of a chloride-sensitive probe which was trapped within the vesicles at the time of reconstitution. The benzodiazepine [H-3] flunitrazepam binds to an apparently homogeneous population of sites in these preparations (K(d) of 5 nM) whereas the GABA analogue [H-3]muscimol binds to both high- and low-affinity sites (K(d)s of 10 nM and 0.27 muM). Muscimol stimulated chloride flux with an EC50 of 0.2 muM and, at similar concentrations (EC50 = 0.16 muM), potentiated [H-3]flunitrazepam binding, suggesting that occupancy of the low-affinity sites may be important for these effects. Diazepam shifted the dose-response curve for muscimol-stimulated flux to about 4-fold Iower concentrations without affecting the maximum response. Diazepam did not, however, alter the equilibrium binding of [H-3]muscimol. The purified receptor showed densensitization since flux responses were abolished by prior exposure to muscimol. The competitive antagonist bicuculline and the channel blocker picrotoxin completely inhibited ion flux mediated by 3 muM muscimol with EC50 values of 5.3 and 2.5 muM, respectively. These results are discussed in terms of possible mechanisms for activation, inhibition, and modulation of GABA(A) receptors. The results further demonstrate the usefulness of reconstituted preparations for studying the biochemical and functional properties of purified, native GABA(A) receptors.