Desensitization is a common property of membrane receptors, including ion channels. The newly identified proton-activated chloride (PAC) channel plays an important role in regulating the pH and size of organelles in the endocytic pathway, and is also involved in acid-induced cell death. However, how the PAC channel desensitizes is largely unknown. Here, we show by patch-clamp electrophysiological studies that PAC undergoes pH-dependent desensitization upon prolonged acid exposure. Through structure-guided and comprehensive mutagenesis, we identified several residues critical for PAC desensitization, including histidine (H) 98, glutamic acid (E) 94, and aspartic acid (D) 91 at the extracellular extension of the transmembrane helix 1 (TM1), as well as E107, D109, and E250 at the extracellular domain (ECD)–transmembrane domain (TMD) interface. Structural analysis and molecular dynamic simulations revealed extensive interactions between residues at the TM1 extension and those at the ECD–TMD interface. These interactions likely facilitate PAC desensitization by stabilizing the desensitized conformation of TM1, which undergoes a characteristic rotational movement from the resting and activated states to the desensitized state. Our studies establish a new paradigm of channel desensitization in this ubiquitously expressed ion channel and pave the way for future investigation of its relevance in cellular physiology and disease.