A family of tissue-specific auxiliary β subunits modulates large conductance voltage- and calcium-activated potassium (BK) channel gating properties to suit their diverse functions. Paradoxically, β subunits both promote BK channel activation through a stabilization of voltage sensor activation and reduce BK channel openings through an increased energetic barrier of the closed-to-open transition. The molecular determinants underlying β subunit function, including the dual gating effects, remain unknown. In this study, we report the first identification of a β1 functional domain consisting of Y74, S104, Y105, and I106 residues located in the extracellular loop of β1. These amino acids reside within two regions of highest conservation among related β1, β2, and β4 subunits. Analysis in the context of the Horrigan-Aldrich gating model revealed that this domain functions to both promote voltage sensor activation and also reduce intrinsic gating. Free energy calculations suggest that the dual effects of the β1 Y74 and S104-I106 domains can be largely accounted for by a relative destabilization of channels in open states that have few voltage sensors activated. These results suggest a unique and novel mechanism for β subunit modulation of voltage-gated potassium channels wherein interactions between extracellular β subunit residues with the external portions of the gate and voltage sensor regulate channel opening.