A subset of neurons in the brain, known as 'glucose-excited' neurons, depolarize and increase their firing rate in response to increases in extracellular glucose. Similar to insulin secretion by pancreatic beta-cells, glucose excitation of neurons is driven by ATP-mediated closure of ATP-sensitive potassium (K(ATP)) channels. Although beta-cell-like glucose sensing in neurons is well established, its physiological relevance and contribution to disease states such as type 2 diabetes remain unknown. To address these issues, we disrupted glucose sensing in glucose-excited pro-opiomelanocortin (POMC) neurons via transgenic expression of a mutant Kir6.2 subunit (encoded by the Kcnj11 gene) that prevents ATP-mediated closure of K(ATP) channels. Here we show that this genetic manipulation impaired the whole-body response to a systemic glucose load, demonstrating a role for glucose sensing by POMC neurons in the overall physiological control of blood glucose. We also found that glucose sensing by POMC neurons became defective in obese mice on a high-fat diet, suggesting that loss of glucose sensing by neurons has a role in the development of type 2 diabetes. The mechanism for obesity-induced loss of glucose sensing in POMC neurons involves uncoupling protein 2 (UCP2), a mitochondrial protein that impairs glucose-stimulated ATP production. UCP2 negatively regulates glucose sensing in POMC neurons. We found that genetic deletion of Ucp2 prevents obesity-induced loss of glucose sensing, and that acute pharmacological inhibition of UCP2 reverses loss of glucose sensing. We conclude that obesity-induced, UCP2-mediated loss of glucose sensing in glucose-excited neurons might have a pathogenic role in the development of type 2 diabetes.