We report the first explanation of the novel electrical switching in two‐terminal devices based on thin V2O5⋅1.6H2O gel films. The switching is shown to be associated with the existence of a current‐induced channel between the contacts. The data demonstrate that the switching between the ‘‘on’’ and ‘‘off’’ states of the device is driven by the joule heating of a metal‐insulator (MI) transition in the channel material (or filaments in the channel). Resistivity data on the channel exhibit a sharp MI transition atT=334 K which is also the temperature at which the device is observed to stop switching. The signature of the MI transition in the channel is very similar to that observed in VO2(TMI=341 K), suggesting the channel may contain VO2−xconduction paths.