ATP-sensitive potassium (K(ATP)) channels are found in a wide variety of cell types where they couple cell metabolism to electrical activity. In glucose-sensing tissues, these channels respond to fluctuating changes in blood glucose concentration, but in other tissues they are activated only under ischemic conditions or in response to hormonal stimulation. Although K(ATP) channels in different tissues have different regulatory subunits, in almost all cases (except vascular smooth muscle) the pore-forming subunit is the inwardly rectifying K(+) channel Kir6.2. This article reviews recent studies of Kir6.2, focussing on the relation between channel structure and function, and on naturally occurring mutations in Kir6.2 that lead to human disease. New insights into the location of the ATP-binding site, the permeation pathway for K(+), and the gating of the pore provided by homology modelling are discussed in relation to functional studies. Gain-of-function mutations in Kir6.2 cause permanent neonatal diabetes mellitus (PNDM) by reducing the ATP sensitivity of the K(ATP) channel and increasing the K(ATP) current, which is predicted to inhibit beta-cell electrical activity and insulin secretion. Mutations at specific residues, that cause a greater decrease in ATP sensitivity, are associated with additional neurological symptoms. The molecular mechanism underlying the differences in ATP sensitivity produced by these two classes of mutations is discussed. We speculate on how some mutations lead to neurological disease and why no obvious cardiac symptoms are observed. We also consider the implications of these studies for type-2 diabetes.