OBJECTIVE The E23K variant in the Kir6.2 subunit of the ATP-sensitive K+ channel (KATP channel) is associated with increased risk of type 2 diabetes. The present study was undertaken to increase our understanding of the mechanisms responsible. To avoid confounding effects of hyperglycemia, insulin secretion and action were studied in subjects with the variant who had normal glucose tolerance. RESEARCH DESIGN AND METHODS Nine subjects with the E23K genotype K/K and nine matched subjects with the E/E genotype underwent 5-h oral glucose tolerance tests (OGTTs), graded glucose infusion, and hyperinsulinemic-euglycemic clamp with stable-isotope–labeled tracer infusions to assess insulin secretion, action, and clearance. A total of 461 volunteers consecutively genotyped for the E23K variant also underwent OGTTs. Functional studies of the wild-type and E23K variant potassium channels were conducted. RESULTS Insulin secretory responses to oral and intravenous glucose were reduced by ∼40% in glucose-tolerant subjects homozygous for E23K. Normal glucose tolerance with reduced insulin secretion suggests a change in insulin sensitivity. The hyperinsulinemic-euglycemic clamp revealed that hepatic insulin sensitivity is ∼40% greater in subjects with the E23K variant, and these subjects demonstrate increased insulin sensitivity after oral glucose. The reconstituted E23K channels confirm reduced sensitivity to inhibitory ATP and increase in open probability, a direct molecular explanation for reduced insulin secretion. CONCLUSIONS The E23K variant leads to overactivity of the KATP channel, resulting in reduced insulin secretion. Initially, insulin sensitivity is enhanced, thereby maintaining normal glucose tolerance. Presumably, over time, as insulin secretion falls further or insulin resistance develops, glucose levels rise resulting in type 2 diabetes.