Alkylammonium salts have been used extensively to study the structure and function of potassium channels. Here, we use the hydrophobic tetraoctylammonium (TOA+) to shed light on the structure of the inactivated state of KcsA, a tetrameric prokaryotic potassium channel that serves as a model to its homologous eukaryotic counterparts. By the combined use of a thermal denaturation assay and the analysis of homo-Förster resonance energy transfer in a mutant channel containing a single tryptophan (W67) per subunit, we found that TOA+ binds the channel cavity with high affinity, either with the inner gate open or closed. Moreover, TOA+ bound at the cavity allosterically shifts the equilibrium of the channel’s selectivity filter conformation from conductive to an inactivated-like form. The inactivated TOA+–KcsA complex exhibits a loss in the affinity towards permeant K+ at pH 7.0, when the channel is in its closed state, but maintains the two sets of K+ binding sites and the W67–W67 intersubunit distances characteristic of the selectivity filter in the channel resting state. Thus, the TOA+–bound state differs clearly from the collapsed channel state described by X-ray crystallography and claimed to represent the inactivated form of KcsA.