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The top genetic association signal for type 2 diabetes (T2D) in Southwestern American Indians maps to intron 15 of <i>KCNQ1</i>, an imprinted gene. We aim to understand the biology whereby variation at this locus affects T2D specifically in this genomic background. To do so, we obtained human induced pluripotent stem cells (hiPSC) derived from American Indians. Using these iPSCs, we show that imprinting of <i>KCNQ1</i> and <i>CDKN1C</i> during pancreatic islet-like cell generation from iPSCs is consistent with known imprinting patterns in fetal pancreas and adult islets and therefore is an ideal model system to study this locus. In this report, we detail the use of allele-specific guide RNAs and CRISPR to generate isogenic hiPSCs that differ only at multiple T2D associated intronic SNPs at this locus which can be used to elucidate their functional effects. Characterization of these isogenic hiPSCs identified a few aberrant cell lines; namely cell lines with large hemizygous deletions in the putative functional region of <i>KCNQ1</i> and cell lines hypomethylated at the <i>KCNQ1OT1</i> promoter. Comparison of an isogenic cell line with a hemizygous deletion to the parental cell line identified <i>CDKN1C</i> and <i>H19</i> as differentially expressed during the endocrine progenitor stage of pancreatic-islet development.