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 play important roles in a wide range of cell types, including neurones, muscle and endocrine tissue, and in pancreatic beta-cells they are involved in insulin secretion. They comprise pore-forming Kir6.2 and regulatory SUR subunits. Kir6.2 is an inwardly rectifying K channel and SUR an ATP-binding cassette transporter. Gain-of-function mutations in the genes encoding both Kir6.2 (KCNJ11) and SUR1 (ABCC8) cause neonatal diabetes (ND). Some gain-of-function mutations produce a severe clinical phenotype, characterized by motor and mental developmental delay, epilepsy, muscle weakness and neonatal diabetes (DEND syndrome). All ND mutations impair the ability of cell metabolism to close the KATP channel, either by reducing the inhibitory effect of ATP (at Kir6.2) or by enhancing the stimulatory effects of Mg-nucleotides (MgATP, MgADP) at SUR1. In many patients, sulphonylurea drugs, which close KATP channels, can be successfully used to treat their diabetes, and in some individuals the neurological symptoms are also partially alleviated. This lecture will discuss the mechanisms by which nucleotides modulate KATP channel activity at Kir6.2 and SUR1, and how ND mutations impair these interactions and lead to an increased KATP current. It will also consider how alterations in KATP channel activity cause diabetes and neurological problems in man and mouse, and evaluate the extent to which mouse models of ND recapitulate the human phenotype.