Purified membrane proteins are most frequently studied solubilized in detergent, but the properties of detergent micelles are very different from those of lipid bilayers. Therefore, there is an increasing interest in studying membrane proteins under conditions that resemble the membrane protein native environment more closely. Although there are indications of differences between membrane proteins in detergent and in lipid bilayers, direct functional and structural comparisons are very hard to find. Nanodiscs have been established as a new platform that consists of two molecules of a membrane scaffold protein that surround a small lipid-bilayer patch. Here, we undertook the task of comparing the function and conformational states of the transport protein MsbA in detergent and nanodiscs using ATPase activity and luminescence resonance energy transfer (LRET) measurements to assess differences in activity and conformational states, respectively. MsbA is a prototypical member of the ATP binding cassette protein superfamily. MsbA activity was higher in nanodiscs vs detergent, which had clear structural correlates: an increase in the fraction of molecules displaying closed nucleotide-binding domain dimers in the apo state, and a decrease in the distance of the "dissociated" nucleotide-binding domains. Our LRET studies support the notion that the widely separated nucleotide binding domains observed in the MsbA x-ray structures in detergent do not correspond to physiological conformations. Although our studies focus on a particular ABC exporter, the possibility of similar environment effects on other membrane proteins should be carefully considered.