Mutations in HNF1A cause Maturity Onset Diabetes of the Young (HNF1A-MODY). To understand mechanisms of β-cell dysfunction, we generated stem cell-derived pancreatic endocrine cells with hypomorphic mutations in HNF1A. HNF1A-deficient β-cells display impaired basal and glucose stimulated-insulin secretion, reduced intracellular calcium levels in association with a reduction in CACNA1A expression, and accumulation of abnormal insulin granules in association with SYT13 down-regulation. Knockout of CACNA1A and SYT13 reproduce the relevant phenotypes. In HNF1A deficient β-cells, glibenclamide, a sulfonylurea drug used in the treatment of HNF1A-MODY patients, increases intracellular calcium, and restores insulin secretion. While insulin secretion defects are constitutive in β-cells null for HNF1A, β-cells heterozygous for hypomorphic HNF1A (R200Q) mutations lose the ability to secrete insulin gradually; this phenotype is prevented by correction of the mutation. Our studies illuminate the molecular basis for the efficacy of treatment of HNF1A-MODY with sulfonylureas, and suggest promise for the use of cell therapies.