Inwardly rectifying potassium (Kir) channels establish and regulate the resting membrane potential of excitable cells in the heart, brain and other peripheral tissues. Phosphatidylinositol- 4,5-bisphosphate (PIP2) is a key direct activator of ion channels, including Kir channels. Gasotransmitters, such as carbon monoxide (CO), have been reported to regulate the activity of Kir channels by altering channel-PIP2 interactions. We tested, in a model system, the effects and mechanism of action of another important gasotransmitter, hydrogen sulfide (H2S) thought to play a key role in cellular responses under ischemic conditions. Direct administration of sodium hydrogen sulfide (NaHS), as an exogenous H2S source, and expression of cystathionine γ-lyase (CSE), a key enzyme that produces endogenous H2S in specific brain tissues, resulted in comparable current inhibition of several Kir2 and Kir3 channels. A “tag switch” assay provided biochemical evidence for sulfhydration of Kir3.2 channels. The extent of H2S regulation depended on the strength of channel-PIP2 interactions: H2S regulation was attenuated when strengthening channel-PIP2 interactions and was increased when channel-PIP2 interactions were weakened by depleting PIP2 levels via different manipulations. These H2S effects took place through specific cytoplasmic cysteine residues in Kir3.2 channels, where atomic resolution structures with PIP2 gives us insight as to how they may alter channel-PIP2 interactions. Mutation of these residues abolished H2S inhibition, and reintroduction of specific cysteine residues into the background of the mutant lacking cytoplasmic cysteine residues, rescued H2S inhibition. Molecular dynamics simulation experiments provided mechanistic insights as to how sulfhydration of specific cysteine residues could lead to changes in channel-PIP2 interactions and channel gating.