Severe neonatal hypoglycemia with pathologic findings of diffuse nesidoblastosis of the pancreas is described in five children of both sexes from two families with unaffected parents. This appears to represent an autosomal recessive disorder of pancreatic development. Despite extensive testing, the diagnosis of hyperinsulinism was difficult in the index case of each family and delayed definitive treatment. Medical therapy with steroids and diazoxide was unsuccessful; pancreatectomy was required to treat persistent hypoglycemia. An abnormality of circulating glucagon found in one child with this disorder suggested that hyperinsulinism may not be the sole hormonal imbalance present, but rather that this disease is one of generalized disturbance of islet cell function. The history of severe, persistent neonatal hypoglycemia in an older sibling should lead the physician to investigate subsequent children for the presence of asymptomatic hypoglycemia.