Glucose regulates pancreatic islet α-cell glucagon secretion directly by its metabolism to generate ATP in α-cells, and indirectly via stimulation of paracrine release of β-cell secretory products, particularly insulin. How the cellular substrates of these pathways converge in the α-cell is not well known. We recently reported the use of the MIP-GFP (mouse insulin promoter-green fluorescent protein) mouse to reliably identify islet α- (non-green cells) and β-cells (green cells), and characterized their ATP-sensitive K+ (KATP) channel properties, showing that α-cell KATP channels exhibited a 5-fold higher sensitivity to ATP inhibition than β-cell KATP channels. Here, we show that insulin exerted paracrine regulation of α-cells by markedly reducing the sensitivity of α-cell KATP channels to ATP (IC50 = 0.18 and 0.50 mm in absence and presence of insulin, respectively). Insulin also desensitized β-cell KATP channels to ATP inhibition (IC50 = 0.84 and 1.23 mm in absence and presence of insulin, respectively). Insulin effects on both islet cell KATP channels were blocked by wortmannin, indicating that insulin acted on the insulin receptor-phosphatidylinositol 3-kinase signaling pathway. Insulin did not affect α-cell A-type K+ currents. Glutamate, known to also inhibit α-cell glucagon secretion, did not activate α-cell KATP channel opening. We conclude that a major mechanism by which insulin exerts paracrine control on α-cells is by modulating its KATP channel sensitivity to ATP block. This may be an underlying basis for the proposed sequential glucose-insulin regulation of α-cell glucagon secretion, which becomes distorted in diabetes, leading to dysregulated glucagon secretion.