Prader-Willi syndrome is a genetic neurodevelopmental disorder with an early phenotype characterized by neonatal hypotonia, failure to thrive, and immature genitalia. The onset of hyperphagia in childhood and developmental, physical and neuropsychiatric characteristics indicate atypical brain development and specifically hypothalamic dysfunction. Whether the latter is a consequence of disruption of hypothalamic pathways for genetic reasons or due to a failure of hypothalamic development remains uncertain. Twenty participants with Prader-Willi syndrome, 40 age-matched controls and 42 obese participants underwent structural MRI scanning. The whole hypothalamus and its subnuclei were segmented from structural acquisitions. The Food-Related Problem Questionnaire was used to provide information relating to eating behaviour. All hypothalamic nuclei were significantly smaller in the Prader-Willi group, compared with age and gender matched controls ( < 0.01) with the exception of the right anterior-inferior nucleus ( = 0.07). Lower whole hypothalamus volume was significantly associated with higher body mass index in Prader-Willi syndrome ( < 0.05). Increased preoccupation with food was associated with lower volumes of the bilateral posterior nuclei and left tubular superior nucleus. The whole hypothalamus and all constituent nuclei were also smaller in Prader-Willi syndrome compared with obese participants ( < 0.001). Connectivity profiles of the hypothalamus revealed that fractional anisotropy was associated with impaired satiety in Prader-Willi syndrome ( < 0.05). We establish that hypothalamic structure is significantly altered in Prader-Willi syndrome, demonstrating that hypothalamic dysfunction linked to eating behaviour is likely neurodevelopmental in nature and furthermore, distinctive compared with obesity in the general population.