Transient and permanent neonatal diabetes mellitus (TNDM and PNDM) are rare conditions occurring in around 1 per 300,000 live births. In TNDM, growth-retarded infants develop diabetes in the first few weeks of life, only to go into remission after a few months with possible relapse to permanent diabetes usually around adolescence or in adulthood. In PNDM, insulin secretory failure occurs in the late fetal or early postnatal period. The very recently elucidated mutations in KCNJ11 and ABCC8 genes, encoding the Kir6.2 and SUR1 subunits of the pancreatic K(ATP) channel involved in regulation of insulin secretion, account for a third to a half of the PNDM cases. Molecular analysis of chromosome 6 anomalies and the KCNJ11 and ABCC8 genes encoding Kir6.2 and SUR1 provides a tool for distinguishing transient from permanent neonatal diabetes mellitus in the neonatal period. Some patients (those with mutations in KCNJ11 and ABCC8) may be transferred from insulin therapy to sulphonylureas.