The small-conductance K⁺ channel (SK) in the apical membrane of the cortical-collecting duct (CCD) is regulated by adenosine triphosphate (ATP) and phosphorylation-dephosphorylation processes. When expressed in Xenopus oocytes, ROMK, a cloned K⁺ channel similar to the native SK channel, can be stimulated by phosphatidylinositol bisphosphate (PIP₂), which is produced by phosphoinositide kinases from phosphatidylinositol. However, the effects of PIP₂ on SK channel activity are not known. In the present study, we investigated the mechanism by which hydrolyzable ATP prevented run-down of SK channel activity in excised apical patches of principal cells from rat CCD. Channel run-down was significantly delayed by pretreatment with hydrolyzable Mg-ATP, but ATPγS and AMP-PNP had no effect. Addition of alkaline phosphatase also resulted in loss of channel activity. After run-down, SK channel activity rapidly increased upon addition of PIP₂. Exposure of inside-out patches to phosphoinositide kinase inhibitors (LY294002, quercetin or wortmannin) decreased channel activity by 74% in the presence of Mg-ATP. PIP₂ added to excised patches reactivated SK channels in the presence of these phosphoinositide kinase inhibitors. The protein kinase A inhibitor, PKI, reduced channel activity by 36% in the presence of Mg-ATP. PIP₂ was also shown to modulate the inhibitory effects of extracellular and cytosolic ATP. We conclude that both ATP-dependent formation of PIP₂ through membrane-bound phosphoinositide kinases and phosphorylation of SK by PKA play important roles in modulating SK channel activity.