Accurate potential functions based on simple and computationally tractable functional forms are critical for meaningful MD simulation studies of ion channels based on atomic models. These systems are particularly challenging due to the large magnitude of the interactions involved and the contrasting features of the various molecular components. Water molecules provide a high dielectric bulk environment while the nonpolar hydrocarbon core of the lipid bilayer provides a low dielectric environment that surrounds the protein channel. The energetics of ion transport results from a delicate balance of very large ion-water and ion-protein interactions. These large energies are often in sharp contrast with the small activation energies, on the order of a few kBT, deduced from experimentally observed ion-fluxes. In the present work, a polarizable force field based on the classical Drude oscillator model was developed to enable all-atom MD simulations of biological ion channels. A systematic hierarchical strategy was used to optimize the parameters for water, ions, proteins, and lipids to best represent a collection of gas and liquid properties on the basis of small molecules representative of relevant functional groups. Ion models were optimized to reproduce both microscopic quantum mechanical and thermodynamic solvation data. Using MD simulations, a protein force field was tested for suite of peptides and proteins, and models of DPPC, DPPE, POPC and DOPC were tested against the experimental properties of bilayer membranes. First results from MD simulations of the KcsA channel embedded in a phospholipid bilayer with explicit solvent will be described.