A novel calcium-dependent potassium current (K(slow)) that slowly activates in response to a simulated islet burst was identified recently in mouse pancreatic beta-cells (Göpel, S.O., T. Kanno, S. Barg, L. Eliasson, J. Galvanovskis, E. Renström, and P. Rorsman. 1999. J. Gen. Physiol. 114:759-769). K(slow) activation may help terminate the cyclic bursts of Ca(2+)-dependent action potentials that drive Ca(2+) influx and insulin secretion in beta-cells. Here, we report that when [Ca(2+)](i) handling was disrupted by blocking Ca(2+) uptake into the ER with two separate agents reported to block the sarco/endoplasmic calcium ATPase (SERCA), thapsigargin (1-5 microM) or insulin (200 nM), K(slow) was transiently potentiated and then inhibited. K(slow) amplitude could also be inhibited by increasing extracellular glucose concentration from 5 to 10 mM. The biphasic modulation of K(slow) by SERCA blockers could not be explained by a minimal mathematical model in which [Ca(2+)](i) is divided between two compartments, the cytosol and the ER, and K(slow) activation mirrors changes in cytosolic calcium induced by the burst protocol. However, the experimental findings were reproduced by a model in which K(slow) activation is mediated by a localized pool of [Ca(2+)] in a subspace located between the ER and the plasma membrane. In this model, the subspace [Ca(2+)] follows changes in cytosolic [Ca(2+)] but with a gradient that reflects Ca(2+) efflux from the ER. Slow modulation of this gradient as the ER empties and fills may enhance the role of K(slow) and [Ca(2+)] handling in influencing beta-cell electrical activity and insulin secretion.