Phosphoinositides (PIPns) are known to regulate the activity of some ion channels. Here we determined that ATP-gated P2X2 channels also are regulated by PIPns and investigated the structural background and the unique features of this regulation. We initially used two- electrode voltage clamp to analyze the electrophysiological properties of P2X2 channels expressed in Xenopus oocytes and observed that preincubation with wortmannin or LY294002, two PI3K inhibitors, accelerated channel desensitization. K365Q or K369Q mutation of the conserved, positively charged, amino acid residues in the proximal region of the cytoplasmic C-terminal domain also accelerated desensitization, whereas K365R or K369R mutation did not. We observed that the permeability of the channel to N-methyl-D-glucamine (NMDG) transiently increased and then decreased after ATP application, and that the speed of the decrease was accelerated by K365Q or K369Q mutation or PI3K inhibition. Using GST-tagged recombinant proteins spanning the proximal C-terminal region, we then analyzed their binding of the P2X2 cytoplasmic domain to anionic lipids using PIPns-coated nitrocellulose membranes. We found that the recombinant proteins that included the positively charged region bound to PIPs and PIP2s, and that this binding was eliminated by the K365Q and K369Q mutations. We also used a fluorescence assay to confirm that fusion proteins comprised of the proximal C-terminal region of P2X2 with EGFP expressed in COS-7 cells closely associated with the membrane. Taken together, these results show that membrane-bound PIPns play a key role in maintaining channel activity and regulating pore dilation through electrostatic interaction with the proximal region of the P2X2 cytoplasmic C-terminal domain.