Perilipin 1 is a lipid droplet coat protein predominantly expressed in adipocytes, where it inhibits basal and facilitates stimulated lipolysis. Loss-of-function mutations in the PLIN1 gene were recently reported in patients with a novel subtype of familial partial lipodystrophy, designated as FPLD4. We now report the identification and characterization of a novel heterozygous frameshift mutation affecting the carboxy-terminus (439fs) of perilipin 1 in two unrelated families. The mutation cosegregated with a similar phenotype including partial lipodystrophy, severe insulin resistance and type 2 diabetes, extreme hypertriglyceridemia, and nonalcoholic fatty liver disease in both families. Poor metabolic control despite maximal medical therapy prompted two patients to undergo bariatric surgery, with remarkably beneficial consequences. Functional studies indicated that expression levels of the mutant protein were lower than wild-type protein, and in stably transfected preadipocytes the mutant protein was associated with smaller lipid droplets. Interestingly, unlike the previously reported 398 and 404 frameshift mutants, this variant binds and stabilizes ABHD5 expression but still fails to inhibit basal lipolysis as effectively as wild-type perilipin 1. Collectively, these findings highlight the physiological need for exquisite regulation of neutral lipid storage within adipocyte lipid droplets, as well as the possible metabolic benefits of bariatric surgery in this serious disease.