Mutations in the gene encoding hepatocyte nuclear factor-4alpha (HNF-4alpha) result in maturity-onset diabetes of the young (MODY). To determine the contribution of HNF-4alpha to the maintenance of glucose homeostasis by the beta cell in vivo, we derived a conditional knockout of HNF-4alpha using the Cre-loxP system. Surprisingly, deletion of HNF-4alpha in beta cells resulted in hyperinsulinemia in fasted and fed mice but paradoxically also in impaired glucose tolerance. Islet perifusion and calcium-imaging studies showed abnormal responses of the mutant beta cells to stimulation by glucose and sulfonylureas. These phenotypes can be explained in part by a 60% reduction in expression of the potassium channel subunit Kir6.2. We demonstrate using cotransfection assays that the Kir6.2 gene is a transcriptional target of HNF-4alpha. Our data provide genetic evidence that HNF-4alpha is required in the pancreatic beta cell for regulation of the pathway of insulin secretion dependent on the ATP-dependent potassium channel.