Loss-of-function mutations in the inward rectifier potassium channel, Kir2.1, cause Andersen-Tawil syndrome (ATS-1), an inherited disorder of periodic paralysis and ventricular arrhythmias. Here, we explore the mechanism by which a specific ATS-1 mutation (V302M) alters channel function. Val-302 is located in the G-loop, a structure that is believed to form a flexible barrier for potassium permeation at the apex of the cytoplasmic pore. Consistent with a role in stabilizing the G-loop in an open conformation, we found the V302M mutation specifically renders the channel unable to conduct potassium without altering subunit assembly or attenuating cell surface expression. As predicted by the position of the Val-302 side chain in the crystal structure, amino acid substitution analysis revealed that channel activity and phosphatidylinositol 4,5-bisphosphate (PIP2) sensitivity are profoundly sensitive to alterations in the size, shape, and hydrophobicity of side chains at the Val-302 position. The observations establish that the Val-302 side chain is a critical determinant of potassium conduction through the G-loop. Based on our functional studies and the cytoplasmic domain crystal structure, we suggest that Val-302 may influence PIP2 gating indirectly by translating PIP2 binding to conformational changes in the G-loop pore.