Phosphatidylinositol 4,5-bisphosphate (PIP2) is a membrane phospholipid that regulates the function of multiple ion channels, including some members of the voltage-gated potassium (Kv) channel superfamily. The PIP2 sensitivity of Kv channels is well established for all five members of the Kv7 family and for Kv1.2 channels; however, regulation of other Kv channels by PIP2 remains unclear. Here, we investigate the effects of PIP2 on Kv2.1 channels by applying exogenous PIP2 to the cytoplasmic face of excised membrane patches, activating muscarinic receptors (M1R), or depleting endogenous PIP2 using a rapamycin-translocated 5-phosphatase (FKBP-Inp54p). Exogenous PIP2 rescued Kv2.1 channels from rundown and partially prevented the shift in the voltage-dependence of inactivation observed in inside-out patch recordings. Native PIP2 depletion by the recruitment of FKBP-Insp54P or M1R activation in whole-cell experiments, induced a shift in the voltage-dependence of inactivation, an acceleration of the closed-state inactivation, and a delayed recovery of channels from inactivation. No significant effects were observed on the activation mechanism by any of these treatments. Our data can be modeled by a 13-state allosteric model that takes into account that PIP2 depletion facilitates inactivation of Kv2.1. We propose that PIP2 regulates Kv2.1 channels by interfering with the inactivation mechanism.