Paxilline, a tremorogenic fungal alkaloid, potently inhibits large conductance Ca2+- and voltage-activated K+ (BK)- type channels, but little is known about the mechanism underlying this inhibition. Here we show that inhibition is inversely dependent on BK channel open probability (Po), and is fully relieved by conditions that increase Po, even in the constant presence of paxilline. Manipulations that shift BK gating to more negative potentials reduce inhibition by paxilline in accordance with the increase in channel Po. Measurements of Po times the number of channels at negative potentials support the idea that paxilline increases occupancy of closed states, effectively reducing the closed-open equilibrium constant, L(0). Gating current measurements exclude an effect of paxilline on voltage sensors. Steady-state inhibition by multiple paxilline concentrations was determined for four distinct equilibration conditions, each with a distinct Po. The IC50 for paxilline shifted from around 10 nM when channels were largely closed to near 10 μM as maximal Po was approached. Model-dependent analysis suggests a mechanism of inhibition in which binding of a single paxilline molecule allosterically alters the intrinsic L(0) favoring occupancy of closed states, with affinity for the closed conformation being >500-fold greater than affinity for the open conformation. The rate of inhibition of closed channels was linear up through 2 μM paxilline, with a slope of 2 × 106 M-1s-1. Paxilline inhibition was hindered by either the bulky cytosolic blocker, bbTBA, or by concentrations of cytosolic sucrose that hinder ion permeation. However, paxilline does not hinder MTSET modification of the inner cavity residue, A313C. We conclude that paxilline binds more tightly to the closed conformation, favoring occupancy of closed-channel conformations, and propose that it binds to a superficial position near the entrance to the central cavity, but does not hinder access of smaller molecules to this cavity.