Diabetes is characterized by hyperglycaemia due to impaired insulin secretion and aberrant glucagon secretion resulting from changes in pancreatic islet cell function and/or mass. The extent to which hyperglycaemia per se underlies these alterations remains poorly understood. Here we show that β-cell-specific expression of a human activating K_ATP channel mutation in adult mice leads to rapid diabetes and marked alterations in islet morphology, ultrastructure and gene expression. Chronic hyperglycaemia is associated with a dramatic reduction in insulin-positive cells and an increase in glucagon-positive cells in islets, without alterations in cell turnover. Furthermore, some β-cells begin expressing glucagon, whilst retaining many β-cell characteristics. Hyperglycaemia, rather than K_ATP channel activation, underlies these changes, as they are prevented by insulin therapy and fully reversed by sulphonylureas. Our data suggest that many changes in islet structure and function associated with diabetes are attributable to hyperglycaemia alone and are reversed when blood glucose is normalized.