The signaling mechanisms that regulate CLC anion channels are poorly understood. Caenorhabditis elegans CLH-3b is a member of the CLC-1/2/Ka/Kb channel subfamily. CLH-3b is activated by meiotic cell-cycle progression and cell swelling. Inhibition is brought about by GCK-3 kinase-mediated phosphorylation of S742 and S747 located on a ∼176 amino acid disordered domain linking CBS1 and CBS2. Much of the inter-CBS linker is dispensable for channel regulation. However, deletion of a 14 amino acid activation domain encompassing S742 and S747 inhibits channel activity to the same extent as GCK-3. The crystal structure of CmCLC demonstrated that CBS2 interfaces extensively with an intracellular loop connecting membrane helices H and I, the C-terminus of helix D, and a short linker connecting helix R to CBS1. Point mutagenesis of this interface identified two highly conserved aromatic amino acid residues located in the H-I loop and the first α-helix (α1) of CBS2. Mutation of either residue to alanine rendered CLH-3b insensitive to GCK-3 inhibition. We suggest that the dephosphorylated activation domain normally interacts with CBS1 and/or CBS2, and that conformational information associated with this interaction is transduced through a conserved signal transduction module comprising the H-I loop and CBS2 α1.