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Loss- or gain-of-function mutations in ATP-sensitive potassium channel (K-ATP)-encoding genes, KCNJ8 and ABCC9, cause human central nervous system disorders with unknown pathogenesis. Here, using mice, zebrafish, and cell culture models, we investigated cellular and molecular causes of brain dysfunctions derived from altered K-ATP channel function. We show that genetic/chemical inhibition or activation of KCNJ8/ABCC9-containing K-ATP channel function leads to brain-selective suppression or promotion of arterial/arteriolar vascular smooth muscle cell (VSMC) differentiation, respectively. We further show that brain VSMCs develop from KCNJ8/ABCC9-containing K-ATP channel-expressing mural cell progenitor and that K-ATP channel cell autonomously regulates VSMC differentiation through modulation of intracellular Ca2+ oscillation via voltage-dependent calcium channels. Consistent with defective VSMC development, Kcnj8 knockout mice showed deficiency in vasoconstrictive capacity and neuronal-evoked vasodilation leading to local hyperemia. Our results demonstrate a role for KCNJ8/ABCC9-containing K-ATP channels in the differentiation of brain VSMC, which in turn is necessary for fine-tuning of cerebral blood flow.