Glycine receptors are pentameric ligand-gated ion channels that conduct chloride ions across postsynaptic membranes to facilitate fast inhibitory neurotransmission. In addition to gating by the glycine agonist, interactions with lipids and other compounds in the surrounding membrane environment modulate their function, but molecular details of these interactions remain unclear, in particular, for cholesterol. Here, we report coarse-grained simulations in a model neuronal membrane for three zebrafish glycine receptor structures representing apparent resting, open, and desensitized states. We then converted the systems to all-atom models to examine detailed lipid interactions. Cholesterol bound to the receptor at an outer-leaflet intersubunit site, with a preference for the open and desensitized versus resting states, indicating that it can bias receptor function. Finally, we used short atomistic simulations and iterative amino acid perturbations to identify residues that may mediate allosteric gating transitions. Frequent cholesterol contacts in atomistic simulations clustered with residues identified by perturbation analysis and overlapped with mutations influencing channel function and pathology. Cholesterol binding at this site was also observed in a recently reported pig heteromeric glycine receptor. These results indicate state-dependent lipid interactions relevant to allosteric transitions of glycine receptors, including specific amino acid contacts applicable to biophysical modeling and pharmaceutical design.