Sulfonylureas, which stimulate insulin secretion from pancreatic beta-cells, are widely used to treat both type 2 diabetes and neonatal diabetes. These drugs mediate their effects by binding to the sulfonylurea receptor subunit (SUR) of the ATP-sensitive K+ (K-ATP) channel and inducing channel closure. The mechanism of channel inhibition is unusually complex. First, sulfonylureas act as partial antagonists of channel activity, and second, their effect is modulated by MgADP. We analyzed the molecular basis of the interactions between the sulfonylurea gliclazide and Mg-nucleotides on beta-cell and cardiac types of K-ATP channel (Kir6.2/SUR1 and Kir6.2/SUR2A, respectively) heterologously expressed in Xenopus laevis oocytes. The SUR2A-Y1206S mutation was used to confer gliclazide sensitivity on SUR2A. We found that both MgATP and MgADP increased gliclazide inhibition of Kir6.2/SUR1 channels and reduced inhibition of Kir6.2/SUR2A-Y1206S. The latter effect can be attributed to stabilization of the cardiac channel open state by Mg-nucleotides. Using a Kir6.2 mutation that renders the KATP channel insensitive to nucleotide inhibition (Kir6.2-G334D), we showed that gliclazide abolishes the stimulatory effects of MgADP and MgATP on beta-cell K-ATP channels. Detailed analysis suggests that the drug both reduces nucleotide binding to SUR1 and impairs the efficacy with which nucleotide binding is translated into pore opening. Mutation of one (or both) of the Walker A lysines in the catalytic site of the nucleotide-binding domains of SUR1 may have a similar effect to gliclazide on MgADP binding and transduction, but it does not appear to impair MgATP binding. Our results have implications for the therapeutic use of sulfonylureas.