Since the KCNB1 encoding Kv2.1 channel accounts for the majority of Kv currents modulating insulin secretion by pancreatic islet beta-cells, we postulated that KCNB1 is a plausible candidate gene for genetic variation contributing to the variable compensatory secretory function of beta-cells in type-2 diabetes (T2D). We conducted two studies, a case-control study and a cross-section study, to investigate the association of common single-nucleotide polymorphisms (SNPs) in KCNB1 with T2D and its linking traits. In the case-control study, we first examined the association of 20 tag SNPs of KCNB1 with T2D in a population with 226 T2D patients and non-diabetic subjects (screening study). We then identified the association in an enlarged population of 412 T2D patients and non-diabetic subjects (replication study). In the cross-sectional study, we investigated the linkage between the candidate SNP rs1051295 and T2D by comparing beta-cell function and insulin sensitivity among rs1051295 genotypes in a general population of 1051 subjects at fasting and after glucose loading (oral glucose tolerance tests, OGTT) in 84 fasting glucose impaired subjects, and several T2D-related traits. We found that among the 19 available tag SNPs, only the KCNB1 rs1051295 was associated with T2D (P = 0.027), with the rs1051295 TT genotype associated with an increased risk of T2D compared with genotypes CC (P = 0.009). At fasting, rs1051295 genotype TT was associated with a 9.8% reduction in insulin sensitivity compared to CC (P = 0.008); along with increased plasma triglycerides (TG) levels (TT/CC: P = 0.046) and increased waist/hip (W/H) ratio (TT/CC: P = 0.013; TT/TC: P = 0.002). OGTT confirmed that genotype TT exhibited reduced insulin sensitivity by 16.3% (P = 0.030) compared with genotype TC+CC in a fasting glucose impaired population. The KCNB1 rs1051295 genotype TT in the Chinese Han population is associated with decreased insulin sensitivity and increased plasma TG and W/H ratio, which together contribute to an increased risk for T2D.