K(ATP) channels regulate insulin secretion from pancreatic beta-cells. Loss- and gain-of-function mutations in the genes encoding the Kir6.2 and SUR1 subunits of this channel cause hyperinsulinism of infancy and neonatal diabetes, respectively. We report two novel mutations in the gating loop of Kir6.2 which cause neonatal diabetes with developmental delay (T293N) and hyperinsulinism (T294M). These mutations increase (T293N) or decrease (T294M) whole-cell K(ATP) currents, accounting for the different clinical phenotypes. The T293N mutation increases the intrinsic channel open probability (Po((0))), thereby indirectly decreasing channel inhibition by ATP and increasing whole-cell currents. T294M channels exhibit a dramatically reduced Po((0)) in the homozygous but not in the pseudo-heterozygous state. Unlike wild-type channels, hetT294M channels were activated by MgADP in the absence but not in the presence of MgATP; however, they are activated by MgGDP in both the absence and presence of MgGTP. These mutations demonstrate the importance of the gating loop of Kir channels in regulating Po((0)) and further suggest that Mg-nucleotide interaction with SUR1 may reduce ATP inhibition at Kir6.2.