Neurotransmission is a fundamental process responsible for several cognitive functions, it is facilitated by intricate network of proteins including ion channels and G protein-coupled receptors (GPCRs). G protein-coupled inwardly rectifying potassium (GIRK) channels are key players in neurotransmission, and the major source of inhibition in brain mediated by upstream GPCRs. Several studies have shown that GIRK channels are modulated upon exposure to drugs of abuse, and by alcohol, making them a promising drug target for treating addiction. GIRKs assemble as homo- or heterotetramers of isoforms 1, 2, 3 and 4. GIRK has two distinct domains, a transmembrane (TMD) and cytoplasmic domain (CTD). The selectivity filter is in the TMD near turret and acts as a gatekeeper to ensure that potassium ions are conducted through the pore along the central four-fold axis. In GIRK, the pore opening and ion conduction are also controlled by two gates, inner-helix and G loop which are regulated upon binding of phosphatidylinositol 4,5-bisphosphate (PIP2) and G proteins Gβγ, respectively. X-ray crystal structures of GIRK2 with PIP2 and Gβγ have provided insights on their gating mechanism. However, these structures are either in a closed or pre-open conformation; obtaining an “open” state structure of GIRK2 remains a challenge. We have used cryoEM to study the mechanism of lipid modulation in GIRK2. These studies revealed number of interesting findings. Firstly, we have determined a novel apo GIRK2 structure with the CTD detached from the transmembrane region. Interestingly, in the presence of PIP2, the CTD was in a fully engaged conformation with four PIP2 molecules bound at the TMD-CTD interface while there were also other conformers with detached CTD (like apo) suggesting GIRK2 has low affinity for PIP2. It’s proposed Gβγ or cholesterol binding might increase the channel’s affinity for PIP2. In our analysis, in the presence of cholesterol analog cholesteryl hemisuccinate (CHS) and PIP2, the channel was mostly in an engaged conformation suggesting cholesterol might be a positive allosteric modulator. The CHS is bound in a peripheral pocket near PIP2 encompassing mainly of hydrophobic residues. Functional studies further support this cholesterol binding site, mutation of key residues in this pocket reduced cholesterol potentiation. Binding of CHS has no significant change in the channel conformation implying it might primarily be important for increasing PIP2 affinity. Our GIRK2 structures with four PIP2 bound at the TMD-CTD interface and with slightly different PIP2 coordination is also in a pre-open conformation but has a wider pore opening at the inner-helix gate when compared to other solved structures. These studies have begun to unravel the basis for GIRK gating, still there remains a large gap in understanding how the open state conformation will be in these channels, and how their gating mechanism is influenced by other anionic lipids and Gβγ. Elucidating the structural mechanisms underlying lipid modulation and gating of GIRK channels could facilitate the development of therapeutics for treating neurological diseases.