Activation of the P2X(7) receptor by extracellular nucleotides modulates multiple immune functions, including inflammatory mediator production, membrane fusion events, and apoptosis. Previous studies have revealed that the C terminus of this multimeric cation channel possesses a lipid-interaction motif that has been proposed to regulate receptor function. This domain is homologous to the LPS binding region of the LPS binding protein, and we demonstrated that two basic residues (Arg(578), Lys(579)) within this motif are essential for LPS binding to P2X(7) in vitro. Because P2X(7) can influence LPS action, and because lipid interaction motifs modulate the trafficking of other ion channel-linked receptors, we hypothesized that this motif of P2X(7) is critical for receptor function and trafficking. In these studies we mutated Arg(578) and Lys(579) of P2X(7), and the expression profile, channel activity, and pore formation of the mutant were characterized in transfected human embryonic kidney 293 cells. In contrast with the wild-type receptor, the P2X(7)-R578E/K579E mutant fails to demonstrate surface immunoreactivity despite normal levels of total protein expression. This effect on the mutant receptor is unlikely to result from widespread defects in protein folding, because surface localization, determined using conformation-specific Abs, can be restored by growing the cells at 25 degrees C, conditions that slow receptor recycling. Despite surface expression at reduced temperatures, at 25 degrees C the P2X(7)-R578E/K579E mutant still exhibits greatly reduced sodium, potassium, and calcium channel activity when compared with the wild-type receptor, and cannot induce pore formation. These data suggest that the lipid interaction motif of the P2X(7) C terminus controls receptor trafficking and modulates channel activity.