Inactivation is how ion channels terminate ion flux through pores while opening stimulus is still present. In neurons, inactivation of both Na and K channels is crucial for action potential generation and regulation of firing frequency. It has been proposed that a cytoplasmic domain of the channel complex plugs the open pore to inactivate it via a “ball-and-chain” mechanism, but no structural evidence of this had been observed. We used cryo-EM to determine the gating mechanism in Ca2+-activated K channels by obtaining structures of a purely Ca2+-gated and inactivating MthK channel in a lipid environment. We obtained structural evidence of a ball-and-chain inactivation mechanism in these channels in the presence of Ca2+. In the absence of Ca2+ we obtained a structure in closed state, where the bundle-crossing is sterically shut but where fenestrations are now visible between subunits, connecting the channel pore with the lipid bilayers. We showed that these fenestrations are the pathways that quaternary amine channel blockers use to access the channel pore in the closed state, highlighting a novel state-dependent access for potential drugs in this channel family. In addition, we showed that a reassessment may be needed about inferring gate location from channel block experiments when multiple access pathways into the pore are available. Finally, we showed that ball-and-chain inactivation in MthK channels is highly lipid bilayer-thickness dependent. This was not due to a change in the channel pore dimensions (the receptor site for inactivation peptide) in the different thickness bilayers, but rather to a differential interaction between the inactivation peptide and thicker versus thinner bilayers. In brief, the bilayers offer an alternate binding site for the peptide and the thicker bilayers can scavenge it away from binding to the pore. These results highlight the ease of modulating channel activity by simply changing bilayer thickness.