The prediction that overactivity of the pancreatic ATP-sensitive K⁺ channel (K_ATP channel) underlies reduced insulin secretion and causes a diabetic phenotype in humans has recently been borne out by genetic studies implicating “activating” mutations in the Kir6.2 subunit of K_ATP as causal in both permanent and transient neonatal diabetes. Here we characterize the channel properties of Kir6.2 mutations that underlie transient neonatal diabetes (I182V) or more severe forms of permanent neonatal diabetes (V59M, Q52R, and I296L). In all cases, the mutations result in a significant decrease in sensitivity to inhibitory ATP, which correlates with channel “overactivity” in intact cells. Mutations can be separated into those that directly affect ATP affinity (I182V) and those that stabilize the open conformation of the channel and indirectly reduce ATP sensitivity (V59M, Q52R, and I296L). With respect to the latter group, alterations in channel gating are also reflected in a functional “uncoupling” of sulfonylurea (SU) block: SU sensitivity of I182V is similar to that of wild-type mutants, but the SU sensitivity of all gating mutants is reduced, with the I296L mutant being resistant to block by tolbutamide (≤10 mmol/l). These results have important implications for the use of insulinotropic SU drugs as an alternative therapy to insulin injections.