ATP-sensitive potassium (KATP) channels are metabolic sensors that couple the metabolic state of the cell to the electrical activity of the plasma membrane. They consist of pore-forming Kir6.2 and regulatory sulphonylurea receptor (SUR) subunits. Metabolic regulation of channel activity is mediated by changes in intracellular adenine nucleotides: ATP closes the channel by binding to Kir6.2, whereas Mg-nucleotide interaction with the nucleotide-binding domains of SUR1 stimulates channel activity and reverses channel inhibition by ATP. KATP channels mediate metabolic regulation of electrical activity in numerous tissues, including neurones, cardiac and skeletal muscle and endocrine cells. In pancreatic beta-cells, KATP channels are open at rest, hyperpolarizing the cell and inhibiting insulin release. Glucose metabolism stimulates insulin secretion by closing KATP channels, depolarizing the beta-cell and opening voltage-gated Ca2+ channels. Sulphonylurea drugs bypass the metabolic steps, and stimulate insulin secretion directly by binding to, and closing, the KATP channel. They are used to treat type 2 diabetes. Gain-of-function mutations in the genes encoding Kir6.2 (KCNJ11) and SUR1 (ABCC8) can cause neonatal diabetes, and some mutations produce a severe clinical phenotype, characterized by developmental delay, epilepsy, muscle weakness and neonatal diabetes, Many patients have been able to switch from insulin injections to oral sulphonylurea therapy, and in some individuals the neurological symptoms can also be partially alleviated. This lecture will discuss the mechanisms by which neonatal diabetes mutations affect KATP channel function and consider how increased KATP channel activity produces the disease phenotype. Using an inducible mouse model of neonatal diabetes, we found that selective expression of gain-of-function mutations in insulin-secreting cells produced pronounced hyperglycaemia and a reduction in insulin secretion, the percentage of beta-cells/islet and insulin content, which were reversed by sulphonylurea therapy. Selective expression in neurones recapitulated the neurological problems of patients and identified novel ones.