Members of the TREK family of two-pore domain potassium channels are highly sensitive to regulation by membrane lipids, including phosphatidylinositol-4,5-bisphosphate (PIP2). Previous studies have demonstrated that PIP2 increases TREK-1 channel activity; however, the mechanistic understanding of the conformational transitions induced by PIP2 remain unclear. Here, we used coarse-grained molecular dynamics and atomistic molecular dynamics simulations to model the PIP2 -binding site on both the up and down state conformations of TREK-1. We also calculated the free energy of PIP2 binding relative to other anionic phospholipids in both conformational states using potential of mean force and free-energy-perturbation calculations. Our results identify state-dependent binding of PIP2 to sites involving the proximal C-terminus, and we show that PIP2 promotes a conformational transition from a down state toward an intermediate that resembles the up state. These results are consistent with functional data for PIP2 regulation, and together provide evidence for a structural mechanism of TREK-1 channel activation by phosphoinositides.