ATP-insensitive KATP channel mutations cause neonatal diabetes mellitus (NDM). To explore the mechanistic etiology, we generated transgenic mice carrying an ATP-insensitive mutant KATP channel subunit. Constitutive expression in pancreatic β cells caused neonatal hyperglycemia and progression to severe diabetes and growth retardation, with loss of islet insulin content and β cell architecture. Tamoxifen-induced expression in adult β cells led to diabetes within 2 weeks, with similar secondary consequences. Diabetes was prevented by transplantation of normal islets under the kidney capsule. Moreover, the endogenous islets maintained normal insulin content and secretion in response to sulfonylureas, but not glucose, consistent with reduced ATP sensitivity of β cell KATP channels. In NDM, transfer to sulfonylurea therapy is less effective in older patients. This may stem from poor glycemic control or lack of insulin because glibenclamide treatment prior to tamoxifen induction prevented diabetes and secondary complications in mice but failed to halt disease progression after diabetes had developed.