Inwardly rectifying, ATP-sensitive K⁺ channels (K_ATP) couple metabolism to either cell excitability (Kir6.x) or potassium secretion (Kir1.1). Phosphatidylinositol phospholipids, like PI(4,5)P₂, antagonize nucleotide inhibition of K_ATP channels enhancing the coupling of metabolic events to cell electrical or transport activity. The mechanism by which phospholipids relieve ATP block is unclear. We have shown that maltose-binding fusion proteins (MBP) containing the COOH termini of K_ATP channels (Kir1.1, Kir6.1, and Kir6.2) form functional tetramers that directly bind at least two ATP molecules with negative cooperativity. Here we show that purified phosphatidylinositol phospholipids compete for 2,4,6,-trinitrophenyl (TNP)-ATP binding to the COOH termini of K_ATP channels with EC₅₀ values for PIP₂ between 6–8 μM. The phospholipid potency profile was PIP₃ > PIP₂ = PIP > PI, suggesting that net phospholipid charge was important. A role for head group charge was supported by polycations (neomycin, spermine, and polylysine) reversing the effect of PIP₂ on TNP-ATP binding to the Kir1.1 channel COOH terminal fusion protein. In contrast, the water-soluble charged hydrolytic product of PIP₂, inositol(1,4,5)P₃ (IP₃), had no effect on TNP-ATP binding, suggesting that the acyl chain of PIP₂ was also necessary for its effect on TNP-ATP binding. Indeed, neutral and charged lipids had weak, but significant, effects on TNP-ATP binding. Whereas μM concentrations of PIP₂ could compete with TNP-ATP, we found that mM concentrations of MgATP were required to compete with PIP₂ for binding to these K_ATP channel COOH termini. Thus the COOH termini of K_ATP channels form a nucleotide- and phospholipid-modulated channel gate on which ATP and phospholipids compete for binding.