Voltage-activated potassium (Kv) channels open upon membrane depolarization and proceed to spontaneously inactivate. Inactivation controls neuronal firing rates and serves as a form of short-term memory and is implicated in various human neurological disorders. Here, we use high-resolution cryo-electron microscopy and computer simulations to determine one of the molecular mechanisms underlying this physiologically crucial process. Structures of the activated Shaker Kv channel and of its W434F mutant in lipid bilayers demonstrate that C-type inactivation entails the dilation of the ion selectivity filter and the repositioning of neighboring residues known to be functionally critical. Microsecond-scale molecular dynamics trajectories confirm that these changes inhibit rapid ion permeation through the channel. This long-sought breakthrough establishes how eukaryotic K+ channels self-regulate their functional state through the plasticity of their selectivity filters.