ATP-sensitive potassium (K(ATP)) channels play a key role in glucose-dependent insulin secretion in pancreatic beta-cells. Recently, activating mutations in beta-cell K(ATP) channels were found to be an important cause of neonatal diabetes. In some patients, these mutations may also affect K(ATP) channel function in muscles, nerves and brain which can result in a severe disease termed DEND syndrome (Developmental delay, Epilepsy and Neonatal Diabetes). This review focuses on mutations in the pore-forming K(ATP) channel subunit (Kir6.2) that cause neonatal diabetes and discusses recent advances in our understanding of clinical features of neonatal diabetes, its underlying molecular mechanisms and their impact on treatment.