Inward rectifier K+ channels, which modulate electrical activity in many cell types, are regulated by protein kinases(1,2), guanine-nucleotide-binding proteins (G proteins)(3-6) and probably actin cytoskeleton(7), Generation of phosphatidylinositol 4,5-bisphosphate (PIP2) by ATP-dependent lipid kinases is known to activate inward rectifier Ki(+) channels in cardiac membrane patches(8), Here we report that several cloned inward rectifier K+ channels directly bind PIP2, and that this binding correlates with channel activity. Application of ATP or PIP2 liposomes activates the cloned channels, Stabilized by lipid phosphatase inhibitors, PIP2 antibodies(9) potently inhibit each channel with a unique rate (GIRK1/4 (refs 3-5) approximate to GIRK2 (ref, 6) much greater than IRK1 (ref, 10) approximate to ROMK (ref. 11)). Consistent with the faster dissociation of PIP, from the GIRK channels, the carboxy terminus of GIRK1 binds H-3-PIP2 liposomes more weakly than does that of IRK1 or ROMK1. Mutation of a conserved arginine to glutamine at position 188 reduces the ability of ROMK1 to bind PIP2 and increases its sensitivity to inhibition by PIP2 antibodies. Interactions between GIRK channels and PIP2 are modulated by the beta gamma subunits of the G protein (G beta gamma). When GIRK1/4 channels are allowed to run down completely, they are not activated by addition of G beta gamma alone, but application of PIP2 activates them in minutes without G beta gamma and in just seconds with G beta gamma, Finally, coexpression of G beta gamma with GIRK channels slows the inhibition of K+ currents by PIP2 antibodies by more than 10-fold, Thus G beta gamma activates GIRK channels by stabilizing interactions between PIP2 and the K+ channel.