The inwardly rectifying potassium channel Kir4.2 is sensitive to changes in the extracellular potassium concentration ([K(+)](o)). This form of regulation is manifest as a slow (tens of minutes) increase in the whole-cell currents when [K(+)](o) is increased. Here we have investigated the mechanism of K(o)(+) sensitivity of Kir4.2 expressed in Xenopus oocytes. Using two-electrode voltage clamp we found that the sensitivity is specific for the homomeric form of the channel and is completely abolished when coexpressed with Kir5.1. Furthermore, unlike Kir1.1, there is no coupling between the intracellular pH sensitivity and K(o)(+) sensitivity, as is evident by introducing a mutation (K66M), which greatly decreases the pH(i) sensitivity while the K(o)(+) sensitivity remains unchanged. K(o)(+)-dependent activation of Kir4.2 does not involve an increase in the surface expression of the channel, nor is there a difference in the open probability between high and low [K(+)] as determined through patch-clamp measurements. We also found that there is an inverse relationship between the rates of both activation and deactivation and [K(+)](o). Using a kinetic model we argue that Kir4.2 exists in at least three states at the plasma membrane: a deactivated state, an intermediate unstable state and an active state, and that [K(+)](o) affects the rate of transition from the intermediate state to the active state.