Inactivation is an intrinsic property of several voltage-dependent ion channels, closing the conduction pathway during membrane depolarization and dynamically regulating neuronal activity. BK K(+) channels undergo N-type inactivation via their β2 subunit, but the physiological significance is not clear. Here, we report that inactivating BK currents predominate during the day in the suprachiasmatic nucleus, the brain's intrinsic clock circuit, reducing steady-state current levels. At night inactivation is diminished, resulting in larger BK currents. Loss of β2 eliminates inactivation, abolishing the diurnal variation in both BK current magnitude and SCN firing, and disrupting behavioural rhythmicity. Selective restoration of inactivation via the β2 N-terminal 'ball-and-chain' domain rescues BK current levels and firing rate, unexpectedly contributing to the subthreshold membrane properties that shift SCN neurons into the daytime 'upstate'. Our study reveals the clock employs inactivation gating as a biophysical switch to set the diurnal variation in suprachiasmatic nucleus excitability that underlies circadian rhythm.