The defining structural feature of inward-rectifier potassium (Kir) channels is the unique Kir cytoplasmic domain. Recently we showed that salt bridges located at the cytoplasmic domain subunit interfaces (CD-Is) of eukaryotic Kir channels control channel gating via stability of a novel inactivated closed state. The cytoplasmic domains of prokaryotic and eukaryotic Kir channels show similar conformational rearrangements to the common gating ligand, phosphatidylinositol bisphosphate (PIP2), although these exhibit opposite coupling to opening and closing transitions. In Kir2.1, mutation of one of these CD-I salt bridge residues (R204A) reduces apparent PIP2 sensitivity of channel activity, and here we show that Ala or Cys substitutions of the functionally equivalent residue (Arg-165) in the prokaryotic Kir channel KirBac1.1 also significantly decrease sensitivity of the channel to PIP2 (by 5-30-fold). To further understand the structural basis of CD-I control of Kir channel gating, we examined the effect of the R165A mutation on PIP2-induced changes in channel function and conformation. Single-channel analyses indicated that the R165A mutation disrupts the characteristic long interburst closed state of reconstituted KirBac1.1 in giant liposomes, resulting in a higher open probability due to more frequent opening bursts. Intramolecular FRET measurements indicate that, relative to wild-type channels, the R165A mutation results in splaying of the cytoplasmic domains away from the central axis and that PIP2 essentially induces opposite motions of the major β-sheet in this channel mutant. We conclude that the removal of stabilizing CD-I salt bridges results in a collapsed state of the Kir domain.