The human KCNQ gene family encodes potassium channels linked to several genetic syndromes including neonatal epilepsy, cardiac arrhythmia, and progressive deafness. KCNQ channels form M-type potassium channels, which are critical regulators of neuronal excitability that mediate autonomic responses, pain, and higher brain function. Fundamental mechanisms of the normal and abnormal cellular roles for these channels may be gained from their study in simple model organisms. Here we report that a multigene family of KCNQ-like channels is present in the nematode, Caenorhabditis elegans. We show that many aspects of the functional properties, tissue expression pattern, and modulation of these C. elegans channels are conserved, including suppression by the M1 muscarinic receptor. We also describe a conserved mechanism of modulation by diacylglycerol for a subset of C. elegans and vertebrate KCNQ/KQT channels, which is dependent upon the carboxyl-terminal domains of channel subunits and activated protein kinase C.