Mutations in all four known KCNQ potassium channel alpha-subunit genes lead to human diseases. KCNQ1 (KvLQT1) interacts with the beta-subunit KCNE1 (IsK, minK) to form the slow, depolarization-activated potassium current I(Ks) that is affected in some forms of cardiac arrhythmia. Here we show that the novel beta-subunit KCNE3 markedly changes KCNQ1 properties to yield currents that are nearly instantaneous and depend linearly on voltage. It also suppresses the currents of KCNQ4 and HERG potassium channels. In the intestine, KCNQ1 and KCNE3 messenger RNAs colocalized in crypt cells. This localization and the pharmacology, voltage-dependence and stimulation by cyclic AMP of KCNQ1/KCNE3 currents indicate that these proteins may assemble to form the potassium channel that is important for cyclic AMP-stimulated intestinal chloride secretion and that is involved in secretory diarrhoea and cystic fibrosis.