Neonatal diabetes is a genetically heterogeneous disorder with nine different genetic aetiologies reported to date. Heterozygous activating mutations in the KCNJ11 gene encoding Kir6.2, the pore-forming subunit of the ATP-sensitive potassium (K(ATP)) channel, are the most common cause of permanent neonatal diabetes. The sulphonylurea receptor (SUR) SUR1 serves as the regulatory subunit of the K(ATP) channel in pancreatic beta cells. We therefore hypothesized that activating mutations in the ABCC8 gene, which encodes SUR1, might cause neonatal diabetes. We identified a novel heterozygous mutation, F132L, in the ABCC8 gene of a patient with severe developmental delay, epilepsy and neonatal diabetes (DEND syndrome). This mutation had arisen de novo and was not present in 150 control chromosomes. Residue F132 shows evolutionary conservation across species and is located in the first set of transmembrane helices (TMD0) of SUR1, which is proposed to interact with Kir6.2. Functional studies of recombinant K(ATP) channels demonstrated that F132L markedly reduces the sensitivity of the K(ATP) channel to inhibition by MgATP and this increases the whole-cell K(ATP) current. The functional consequence of this ABCC8 mutation mirrors that of KCNJ11 mutations causing neonatal diabetes and provides new insights into the interaction of Kir6.2 and SUR1. As SUR1 is expressed in neurones as well as in beta cells, this mutation can account for both neonatal diabetes and the neurological phenotype. Our results demonstrate that SUR1 mutations constitute a new genetic aetiology for neonatal diabetes and that they act by reducing the K(ATP) channel's ATP sensitivity.