KCNQ1/Kv7, a low-voltage-gated K+ channel, regulates cardiac rhythm and glucose homeostasis. While KCNQ1 mutations are associated with long-QT syndrome and type2 diabetes, its function in human pancreatic cells remains controversial. We identified a homozygous KCNQ1 mutation (R397W) in an individual with permanent neonatal diabetes melitus (PNDM) without cardiovascular symptoms. To decipher the potential mechanism(s), we introduced the mutation into human embryonic stem cells and generated islet-like organoids (SC-islets) using CRISPR-mediated homology-repair. The mutation did not affect pancreatic differentiation, but affected channel function by increasing spike frequency and Ca2+ flux, leading to insulin hypersecretion. With prolonged culturing, the mutant islets decreased their secretion and gradually deteriorated, modeling a diabetic state, which accelerated by high glucose levels. The molecular basis was the downregulated expression of voltage-activated Ca2+ channels and oxidative phosphorylation. Our study provides a better understanding of the role of KCNQ1 in regulating insulin secretion and β-cell survival in hereditary diabetes pathology.