The Shaker family voltage-dependent potassium channels (Kv1) assemble with cytosolic beta-subunits (Kvbeta) to form a stable complex. All Kvbeta subunits have a conserved core domain, which in one of them (Kvbeta2) is an aldoketoreductase that utilizes NADPH as a cofactor. In addition to this core, Kvbeta1 has an N terminus that closes the channel by the N-type inactivation mechanism. Point mutations in the putative catalytic site of Kvbeta1 alter the on-rate of inactivation. Whether the core of Kvbeta1 functions as an enzyme and whether its enzymatic activity affects N-type inactivation had not been explored. Here, we show that Kvbeta1 is a functional aldoketoreductase and that oxidation of the Kvbeta1-bound cofactor, either enzymatically by a substrate or non-enzymatically by hydrogen peroxide or NADP(+), induces a large increase in open channel current. The modulation is not affected by deletion of the distal C terminus of the channel, which has been suggested in structural studies to interact with Kvbeta. The rate of increase in current, which reflects NADPH oxidation, is approximately 2-fold faster at 0-mV membrane potential than at -100 mV. Thus, cofactor oxidation by Kvbeta1 is regulated by membrane potential, presumably via voltage-dependent structural changes in Kv1.1 channels.