Prader-Willi Syndrome is the most common syndromic form of human obesity and is caused by the loss of function of several genes, including MAGEL2. Mice lacking Magel2 display increased weight gain with excess adiposity and other defects suggestive of hypothalamic deficiency. We demonstrate Magel2-null mice are insensitive to the anorexic effect of peripherally administered leptin. Although their excessive adiposity and hyperleptinemia likely contribute to this physiological leptin resistance, we hypothesized that Magel2 may also have an essential role in intracellular leptin responses in hypothalamic neurons. We therefore measured neuronal activation by immunohistochemistry on brain sections from leptin-injected mice and found a reduced number of arcuate nucleus neurons activated after leptin injection in the Magel2-null animals, suggesting that most but not all leptin receptor-expressing neurons retain leptin sensitivity despite hyperleptinemia. Electrophysiological measurements of arcuate nucleus neurons expressing the leptin receptor demonstrated that although neurons exhibiting hyperpolarizing responses to leptin are present in normal numbers, there were no neurons exhibiting depolarizing responses to leptin in the mutant mice. Additional studies demonstrate that arcuate nucleus pro-opiomelanocortin (POMC) expressing neurons are unresponsive to leptin. Interestingly, Magel2-null mice are hypersensitive to the anorexigenic effects of the melanocortin receptor agonist MT-II. In Prader-Willi Syndrome, loss of MAGEL2 may likewise abolish leptin responses in POMC hypothalamic neurons. This neural defect, together with increased fat mass, blunted circadian rhythm, and growth hormone response pathway defects that are also linked to loss of MAGEL2, could contribute to the hyperphagia and obesity that are hallmarks of this disorder.