ATP-sensitive potassium (KATP) channels are widely distributed in various tissues and cell types where they couple cell metabolism to cell excitability. Gain of channel function (GOF) mutations in the genes encoding Kir6.2 (KCNJ11) or the associated regulatory ssulfonylurea receptor 1 subunit (ABCC8), cause developmental delay, epilepsy and neonatal diabetes (DEND) due to suppressed cell excitability in pancreatic β-cells and neurons. The objective of this study was to determine the molecular basis of infancy-onset diabetes and a mild form of intermediate DEND, resulting from a novel KCNJ11 in frame mutation plus deletion. The naturally occurring Kir6.2 mutation plus deletion (Ser225Thr, Pro226_Pro232del) as well as the isolated S225T mutation or isolated del226-232 deletion were coexpressed with SUR1 in COS cells in homozygous or heterozygous states. The protein expression and gating effects of the resulting channels were assessed biochemically and electrophysiologically. For both the deletion and point mutations, simulated heterozygous expression resulted in overall increased conductance in intact cells in basal conditions and rightward shifted ATP dose-response curves in excised patches, due to increased intrinsic open probability. Interestingly, homomeric channels for the combined deletion/mutation, or for the deletion alone, showed dramatically reduced channel expression at the cell membrane, which would underlie a reduced function in vivo. These results demonstrate that both the mis-sense mutation and the deleted region in the Kir6.2 subunit are important for control of the intrinsic channel gating and suggest that the clinical presentation could be affected by the competition between loss-of-function by reduced trafficking and enhanced channel gating.