The commonly occurring E23K and I337V Kir6.2 polymorphisms in the ATP-sensitive potassium (K_ATP) channel are more frequent in Caucasian type 2 diabetic populations. However, the underlying cellular mechanisms contributing to the pathogenesis of type 2 diabetes remain uncharacterized. Chronic elevation of plasma free fatty acids observed in obese and type 2 diabetic subjects leads to cytosolic accumulation of long-chain acyl CoAs (LC-CoAs) in pancreatic β-cells. We postulated that the documented stimulatory effects of LC-CoAs on K_ATP channels might be enhanced in polymorphic K_ATP channels. Patch-clamp experiments were performed on inside-out patches containing recombinant K_ATP channels (Kir6.2/SUR1) to record macroscopic currents. K_ATP channels containing Kir6.2 (E23K/I337V) showed significantly increased activity in response to physiological palmitoyl-CoA concentrations (100–1,000 nmol/l) compared with wild-type K_ATP channels. At physiological intracellular ATP concentrations (mmol/l), E23K/I337V polymorphic K_ATP channels demonstrated significantly enhanced activity in response to palmitoyl-CoA. The observed increase in K_ATP channel activity may result in multiple defects in glucose homeostasis, including impaired insulin and glucagon-like peptide-1 secretion and increased glucagon release. In summary, these results suggest that the E23K/I337V polymorphism may have a diabetogenic effect via increased K_ATP channel activity in response to endogenous levels of LC-CoAs in tissues involved in the maintenance of glucose homeostasis.