ATP-sensitive potassium (KATP) channels couple the metabolic status of a cell to its membrane potential-a property that endows pancreatic beta-cells with the ability to regulate insulin secretion in accordance with changes in blood glucose. The channel comprises four subunits each of Kir6.2 and the sulphonylurea receptor (SUR1). Here, we report that KATP channels undergo rapid internalisation from the plasma membrane by clathrin-mediated endocytosis. We present several lines of evidence to demonstrate that endocytosis is mediated by a tyrosine based signal (330YSKF333) located in the carboxy-terminus of Kir6.2 and that SUR1 has no direct role. We show that genetic mutations, Y330C and F333I, which cause permanent neonatal diabetes mellitus, disrupt this motif and abrogate endocytosis of reconstituted mutant channels. The resultant increase in the surface density of KATP channels would predispose beta-cells to hyperpolarise and may account for reduced insulin secretion in these patients. The data imply that endocytosis of KATP channels plays a crucial role in the (patho)-physiology of insulin secretion.