In internally dialyzed voltage-clamped squid axons, intracellular or extracellular addition of the sulfhydryl group (-SH) specific reagent p-hydroxymercuriphenylsulfonic acid (PHMPS), causes major modifications in the magnitude and kinetic parameters of the delayed rectifier K+ current. PHMPS produces a dramatic slow-down of the macroscopic current activation kinetics with a simultaneous reduction in its amplitude. In addition, it causes a marked increase in the delay of the macroscopic current at various pre-pulse potentials (Cole-Moore shift). The main effect of PHMPS at the single channel level is a sharp decrease in the open probability (4- to 5-fold). There is, however, a small reduction in single channel conductance (20%). Gating current experiments indicate that PHMPS causes a reduction in the voltage dependence of the activation process as well as a shift of the charge/voltage relationship towards more positive potentials. This, together with an increase in the mean open time, suggests that the open state has been destabilized. The results indicate that the reaction of -SH groups with PHMPS differentially affects the gating process. All the above mentioned effects are partially reversed by either dithiotreitol or beta-mercaptoethanol, -SH group reducing agents.