ATP‐sensitive K+(K ATP) channels are both inhibited and activated by intracellular nucleotides, such as ATP and ADP. The inhibitory effects of nucleotides are mediated via the pore‐forming subunit, Kir6. 2, whereas the potentiatory effects are conferred by the sulfonylurea receptor subunit, SUR. The stimulatory action of Mg‐nucleotides complicates analysis of nucleotide inhibition of Kir6. 2/SUR1 channels. We therefore used a truncated isoform of Kir6. 2, that expresses ATP‐sensitive channels in the absence of SUR1, to explore the mechanism of nucleotide inhibition. We found that Kir6. 2 is highly selective for ATP, and that both the adenine moiety and the β‐phosphate contribute to specificity. We also identified several mutations that significantly reduce ATP inhibition. These are located in two distinct regions of Kir6. 2: the N‐terminus preceding, and the C‐terminus immediately following, the transmembrane domains. Some mutations in the C‐terminus also markedly increased the channel open probability, which may account for the decrease in apparent ATP sensitivity. Other mutations did not affect the single‐channel kinetics, and may reduce ATP inhibition by interfering with ATP binding and/or the link between ATP binding and pore closure. Our results also implicate the proximal C‐terminus in K ATP channel gating.