New approaches are needed to treat people whose obesity and type 2 diabetes (T2D) are driven by specific mechanisms. We investigate a deletion on chromosome 16p11.2 (breakpoint 2-3 [BP2-3]) encompassing SH2B1, a mediator of leptin and insulin signaling. Phenome-wide association scans in the UK (N = 502,399) and Estonian (N = 208,360) biobanks show that deletion carriers have increased body mass index (BMI; p = 1.3 × 10 ^-10 ) and increased rates of T2D. Compared with BMI-matched controls, deletion carriers have an earlier onset of T2D, with poorer glycemic control despite higher medication usage. Cystatin C, a biomarker of kidney function, is significantly elevated in deletion carriers, suggesting increased risk of renal impairment. In a Mendelian randomization study, decreased SH2B1 expression increases T2D risk (p = 8.1 × 10 ^-6 ). We conclude that people with 16p11.2 BP2-3 deletions have early, complex obesity and T2D and may benefit from therapies that enhance leptin and insulin signaling.