All eukaryotic Kir channels are activated by addition of phosphatidylinositol-4,5-bisphosphate (PIP2) or other negative phospholipids to the cytoplasmic face of the membrane, and particular channel residues have been ascribed to involvement in this activation. However, rigorous determination of the quantitative and physical nature of the channel-PIP2 interaction has been elusive given the unavailability of pure recombinant Kir protein in a reconstituted lipid membrane. We have used an 86Rb flux assay to characterize the activity of a purified bacterial Kir channel reconstituted into liposomes (Enkvetchakul et al., 2004. J. Biol. Chem., 279, 47076-47080). The additional availability of a crystal structure for this KirBac1.1 channel (Kuo el al., 2003. Science. 300:1922-1926), now paves the way for a rigorous molecular analysis of channel PIP2 interaction. Strikingly, and in contrast to eukaryotic Kir channels, KirBac1.1 is inhibited by PIP2 and phosphatidylinositol-4-phosphate (PIP) when incorporated at low levels into liposomes. At 0.1% of total lipid (m/m), PIP2 inhibits 86Rb uptake by ~60%, PIP inhibits uptake by ~30%, and there is no significant inhibition by phosphatidylinositol (PI). By contrast, PIP2 is without effect on KcsA-driven Rb-uptake, at up to 3% of total lipid. At up to 1% total lipid, DAG was without effect on KirBac1.1, and there is no effect of exogenous (100 mM) inositol-1,4,5-triphosphate (IP3). The lipid tail and head-group requirement, as well as the phosphorylation-state dependence of inhibition indicate that, as argued for eukaryotic Kir channels, KirBac1.1 interactions with PIP2 are steric and electrostatic in nature. Multiple positive charges in the cytoplasmic domain of KirBac1.1 are involved in regulation of channel activity, and ongoing mutagenesis of potential phospholipid-interacting residues will now clarify the structural details of PIP2-Kir interaction.