Inwardly rectifying K+ channels conduct more inward than outward current as a result of voltage-dependent block of the channel pore by intracellular Mg2+ and polyamines. We investigated the molecular mechanism and structural determinants of inward rectification and ion permeation in a strongly rectifying channel, IRK1. Block by Mg2+ and polyamines is found not to conform to one-to-one binding, suggesting that a channel pore can accommodate more than one blocking particle. A negatively charged amino acid in the hydrophilic C-terminal domain is found to be critical for both inward rectification and ion permeation. This residue and a negatively charged residue in the putative second transmembrane segment (M2) contribute independently to high affinity binding of Mg2+ and polyamines. Mutation of this residue also induces Mg(2+)- and polyamine-independent inward rectification and dramatically alters single-channel behavior. We propose that the hydrophilic C-terminal domain comprises part of the channel pore and that involvement of both hydrophilic and hydrophobic domains in pore lining may provide a molecular basis for the multi-ion, long-pore nature of inwardly rectifying K+ channels.