Common variants in KCNQ1 have recently been reported to be associated with type 2 diabetes in East Asians. We aimed to examine whether these common variants (rs2074196, rs2237892, rs2237895 and rs2237897) were also associated with type 2 diabetes in a population-based cohort of 3210 Chinese Hans and to explore the underlying mechanisms. The SNPs rs2237892, rs2237895 and rs2237897 were significantly associated with type 2 diabetes (OR: 1.33-1.36, P <or= 0.0009), impaired fasting glucose (IFG) (OR: 1.16-1.19, P <or= 0.0193) and combined IFG/type 2 diabetes (OR: 1.23-1.24, P <or= 0.0004), and the corresponding population attributable risks of type 2 diabetes for the three SNPs were 32.5, 18.8 and 35.8%, respectively. However, rs2074196 showed a weak, but significant association with IFG (OR: 1.18 [1.04-1.33], P = 0.009) and combined IFG/type 2 diabetes (OR: 1.17 [1.05-1.30], P = 0.0053), as well as a trend toward association with type 2 diabetes (OR: 1.15 [0.98-1.35], P = 0.0882), suggesting a different pattern of association when compared with the other three SNPs. The four SNPs were all significantly associated with HOMA-B (P <or= 0.042) while rs2237895 and rs22378897 also showed significant association with fasting glucose (P <or= 0.012). Notably, the associations with type 2 diabetes were markedly attenuated after adjusting for HOMA-B (OR(rs2237892): 1.33 [1.05-1.68], P = 0.018; OR(rs2237895): 1.24 [1.00-1.54], P = 0.0524; OR(rs2237897): 1.22[0.98-1.53], P = 0.09). Moreover, GCCC haplotype showed similar associations with type 2 diabetes (OR: 1.48 [1.17-1.85], P = 0.0008), IFG (OR: 1.32 [1.10-1.57], P = 0.0023), combined IFG/type 2 diabetes (OR: 1.37 [1.17-1.61], P = 8.7 x 10(-5)), and lower HOMA-B values (beta = -4.41 +/- 1.62, P = 0.006). These results suggest that KCNQ1 is a major type 2 diabetes gene in the Chinese Hans and it may confer type 2 diabetes risk by impaired beta-cell function.