1. Using the whole-cell recording mode we have characterized two non-conducting states in mammalian Shaker-related voltage-gated K+ channels induced by the removal of extracellular potassium, K+o. 2. In the absence of K+o, current through Kv1.4 was almost completely abolished due to the presence of a charged lysine residue at position 533 at the entrance to the pore. Removal of K+o had a similar effect on current through Kv1.3 when the histidine at the homologous position (H404) was protonated (pH 6.0). Channels containing uncharged residues at the corresponding position (Kv1.1: Y; Kv1.2: V) did not exhibit this behaviour. 3. To characterize the nature of the interaction between Kv1.3 and K+o concentration ([K+]o), we replaced H404 with amino acids of different character, size and charge. Substitution of hydrophobic residues (A, V and L) either in all four subunits or in only two subunits in the tetramer made the channel insensitive to the removal of K+o, possibly by stabilizing the channel complex. Replacement of H404 with the charged residue arginine, or the polar residue asparagine, enhanced the sensitivity of the channel to 0 mM K+o, possibly by making the channel unstable in the absence of K+o. Mutation at a neighbouring position (400) had a similar effect. 4. The effect of removing K+o on current amplitude does not seem to be correlated with the rate of C-type inactivation since the slowly inactivating G380F mutant channel exhibited a similar [K+]o dependence as the wild-type Kv1.3 channel. 5. CP-339,818, a drug that recognizes only the inactivated conformation of Kv1.3, could not block current in the absence of K+o unless the channels were inactivated through depolarizing pulses. 6. We conclude that removal of K+o induces the Kv1.3 channel to transition to a non-conducting 'closed' state which can switch into a non-conducting 'inactivated' state upon depolarization.