Sim1 haploinsufficiency in mice induces hyperphagic obesity and developmental abnormalities of the brain. In humans, abnormalities in chromosome 6q16, a region that includes SIM1, were reported in obese children with a Prader-Willi-like syndrome; however, SIM1 involvement in obesity has never been conclusively demonstrated. Here, SIM1 was sequenced in 44 children with Prader-Willi-like syndrome features, 198 children with severe early-onset obesity, 568 morbidly obese adults, and 383 controls. We identified 4 rare variants (p.I128T, p.Q152E, p.R581G, and p.T714A) in 4 children with Prader-Willi-like syndrome features (including severe obesity) and 4 other rare variants (p.T46R, p.E62K, p.H323Y, and p.D740H) in 7 morbidly obese adults. By assessing the carriers' relatives, we found a significant contribution of SIM1 rare variants to intra-family risk for obesity. We then assessed functional effects of the 8 substitutions on SIM1 transcriptional activities in stable cell lines using luciferase gene reporter assays. Three mutations showed strong loss-of-function effects (p.T46R, p.H323Y, and p.T714A) and were associated with high intra-family risk for obesity, while the variants with mild or no effects on SIM1 activity were not associated with obesity within families. Our genetic and functional studies demonstrate a firm link between SIM1 loss of function and severe obesity associated with, or independent of, Prader-Willi-like features.