Genistein, a generic tyrosine kinase inhibitor, has been used extensively as a tool to investigate the possible regulation of membrane function by tyrosine phosphorylation. Genistein, in micromolar concentrations, alters the function of numerous ion channels and other membrane proteins, but only in few cases has it been demonstrated that the changes in membrane protein (ion channel) function are due to changes in a protein's phosphorylation status. The major common denominator characterizing proteins that are modulated by genistein seems to be that they are imbedded into, and span, the bilayer component of the plasma membrane. We therefore explored whether genistein could alter ion channel function by a bilayer-mediated mechanism and examined genistein's effect on gramicidin A (gA) channels in planar phospholipid bilayers. gA channels form by transmembrane dimerization of two nonconducting subunits, and genistein potentiates gA channel activity by increasing the appearance rate and prolonging the lifetime of bilayer-spanning gA dimers. That is, genistein shifts the equilibrium between nonconducting monomers and conducting dimers in favor of the bilayer-spanning dimers; the changes in channel activity therefore cannot be due to changes in bilayer fluidity. To obtain further insights into the mechanism underlying this modulation of gA channel function, we examined the effects of genistein on channels formed by gA analogues that differ in amino acid sequence. For a given channel length, the effects of genistein on gA dimerization do not depend on the specific sequence, or the chirality, of the channel-forming gA analogues. In contrast, when we change the channel length (by decreasing or increasing the number of amino acid residues in the sequence), or the bilayer thickness (by changing methylene groups in the acyl chains), the magnitude of genistein's effect increases with increasing hydrophobic mismatch between the channel length and the bilayer thickness. These results strongly suggest that genistein alters bilayer mechanical properties, which in turn modulates channel function. This bilayer-mediated mechanism is likely to apply to other pharmacological reagents and membrane proteins.