Benign familial neonatal convulsions (BFNC) is a rare dominantly inherited epileptic syndrome characterized by frequent brief seizures within the first days of life. The disease is caused by mutations in one of two recently identified voltage-gated potassium channel genes, KCNQ2 or KCNQ3. Here, we describe a four-generation BFNC family carrying a novel mutation within the distal, unconserved C-terminal domain of KCNQ2, a 1-bp deletion, 2513delG, in codon 838 predicting substitution of the last seven and extension by another 56 amino acids. Three family members suffering from febrile but not from neonatal convulsions do not carry the mutation, confirming that febrile convulsions and BFNC are of different pathogenesis. Functional expression of the mutant channel in Xenopus oocytes revealed a reduction of the potassium current to 5% of the wild-type current, but the voltage sensitivity and kinetics were not significantly changed. To find out whether the loss of the last seven amino acids or the C-terminal extension because of 2513delG causes the phenotype, a second, artificial mutation was constructed yielding a stop codon at position 838. This truncation increased the potassium current by twofold compared with the wild type, indicating that the pathological extension produces the phenotype, and suggesting an important role of the distal, unconserved C-terminal domain of this channel. Our results indicate that BFNC is caused by a decreased potassium current impairing repolarization of the neuronal cell membrane, which results in hyperexcitability of the central nervous system.