Lipids adhere to membrane proteins to stimulate or suppress molecular and ionic transport and signal transduction. Yet, the molecular details of lipid-protein interaction and their functional impact are poorly characterized. Here we combine NMR, coarse-grained molecular dynamics (CGMD), and functional assays to reveal classic cooperativity in the binding and subsequent activation of a bacterial inward rectifier potassium (Kir) channel by phosphatidylglycerol (PG), a common component of many membranes. Past studies of lipid activation of Kir channels focused primarily on phosphatidylinositol bisphosphate, a relatively rare signaling lipid that is tightly regulated in space and time. We use solid-state NMR to quantify the binding of unmodified 13C-PG to the K+ channel KirBac1.1 in liposomes. This specific lipid-protein interaction has a dissociation constant (Kd) of ∼7 mol percentage PG (ΧPG) with positive cooperativity (n = 3.8) and approaches saturation near 20% ΧPG. Liposomal flux assays show that K+ flux also increases with PG in a cooperative manner with an EC50 of ∼20% ΧPG, within the physiological range. Further quantitative fitting of these data reveals that PG acts as a partial (80%) agonist with fivefold K+ flux amplification. Comparisons of NMR chemical shift perturbation and CGMD simulations at different ΧPG confirm the direct interaction of PG with key residues, several of which would not be accessible to lipid headgroups in the closed state of the channel. Allosteric regulation by a common lipid is directly relevant to the activation mechanisms of several human ion channels. This study highlights the role of concentration-dependent lipid-protein interactions and tightly controlled protein allostery in the activation and regulation of ion channels.