Cerebral small vessel diseases (SVDs) are a central link between stroke and dementia—two comorbidities without specific treatments. Despite the emerging consensus that SVDs are initiated in the endothelium, the early mechanisms remain largely unknown. Deficits in on-demand delivery of blood to active brain regions (functional hyperemia) are early manifestations of the underlying pathogenesis. The capillary endothelial cell strong inward-rectifier K⁺ channel Kir2.1, which senses neuronal activity and initiates a propagating electrical signal that dilates upstream arterioles, is a cornerstone of functional hyperemia. Here, using a genetic SVD mouse model, we show that impaired functional hyperemia is caused by diminished Kir2.1 channel activity. We link Kir2.1 deactivation to depletion of phosphatidylinositol 4,5-bisphosphate (PIP₂), a membrane phospholipid essential for Kir2.1 activity. Systemic injection of soluble PIP₂ rapidly restored functional hyperemia in SVD mice, suggesting a possible strategy for rescuing functional hyperemia in brain disorders in which blood flow is disturbed.