Optical and X-ray spectroscopy indicate that the X-ray pulsar GX 1+4 is seen through a cloud of gravitationally bound matter. We discuss an unstable negative feedback mechanism (originally proposed by Kotani et al. 1999), based on X-ray heating of this matter which controls the accretion rate when the source is in a low X-ray luminosity state. A deep minimum lasting ∼6 hours occurred during observations with the RXTE satellite over 1996 July 19–21. The shape of the X-ray pulses changed remarkably from before to after the minimum. These changes may be related to the transition from neutron star spin-down to spin-up which occurred at about the same time. Smoothed particle hydrodynamic simulations of the effect of adding matter with opposite angular momentum to an existing disk, show that it is possible for a number of concentric rings with alternating senses of rotation to co-exist in a disk. This could provide an explanation for the step-like changes in Ṗ which are observed in GX 1+4. Changes at the inner boundary of the disk occur at the same timescale as that imposed at the outer boundary. Reversals of material torque on the neutron star occur at a minimum in L X .