The activity of G protein-activated inwardly rectifying K⁺ channels (GIRK or Kir3) is important for regulating membrane excitability in neuronal, cardiac and endocrine cells. Although G subunits are known to bind the N- and C-termini of GIRK channels, the mechanism underlying G activation of GIRK is not well understood. Here, we used chimeras and point mutants constructed from GIRK2 and IRK1, a G protein-insensitive inward rectifier, to determine the region within GIRK2 important for G binding and activation. An analysis of mutant channels expressed in Xenopus oocytes revealed two amino acid substitutions in the C-terminal domain of GIRK2, GIRK2_L344E and GIRK2_G347H, that exhibited decreased carbachol-activated currents but significantly enhanced basal currents with coexpression of G subunits. Combining the two mutations (GIRK2_EH) led to a more severe reduction in carbachol-activated and G-stimulated currents. Ethanol-activated currents were normal, however, suggesting that G protein-independent gating was unaffected by the mutations. Both GIRK2_L344E and GIRK2_EH also showed reduced carbachol-activation and normal ethanol-activation when expressed in HEK-293T cells. Using epitope-tagged channels expressed in HEK-293T cells, immunocytochemistry showed that G-impaired mutants were expressed on the plasma membrane, although to varying extents, and could not account completely for the reduced G activation. In vitro G binding assays revealed a 60% decrease in G binding to the C-terminal domain of GIRK2_L344E but no statistical change with GIRK2_EH or GIRK2_G347H, though both mutants exhibited G-impaired activation. Together, these results suggest that L344, and to a lesser extent, G347 play an important functional role in G activation of GIRK2 channels. Based on the 1.8 Å structure of GIRK1 cytoplasmic domains, L344 and G347 are positioned in the L-M loop, which is situated away from the pore and near the N-terminal domain. The results are discussed in terms of a model for activation in which G alters the interaction between the L-M loop and the N-terminal domain.