Magnetic resonance guided focused ultrasound (MRgFUS) thalamotomy is a novel and minimally invasive ablative treatment for essential tremor. The size and location of therapeutic lesions producing the optimal clinical benefits while minimizing adverse effects are not known. We examined these relationships in patients with essential tremor undergoing MRgFUS. We studied 66 patients with essential tremor who underwent MRgFUS between 2012 and 2017. We assessed the Clinical Rating Scale for Tremor (CRST) scores at 3 months after the procedure and tracked the adverse effects (sensory, motor, speech, gait, and dysmetria) 1 day (acute) and 3 months after the procedure. Clinical data associated with the postoperative Day 1 lesions were used to correlate the size and location of lesions with tremor benefit and acute adverse effects. Diffusion-weighted imaging was used to assess whether acute adverse effects were related to lesions encroaching on nearby major white matter tracts (medial lemniscus, pyramidal, and dentato-rubro-thalamic). The area of optimal tremor response at 3 months after the procedure was identified at the posterior portion of the ventral intermediate nucleus. Lesions extending beyond the posterior region of the ventral intermediate nucleus and lateral to the lateral thalamic border were associated with increased risk of acute adverse sensory and motor effects, respectively. Acute adverse effects on gait and dysmetria occurred with lesions inferolateral to the thalamus. Lesions inferolateral to the thalamus or medial to the ventral intermediate nucleus were also associated with acute adverse speech effects. Diffusion-weighted imaging revealed that lesions associated with adverse sensory and gait/dysmetria effects compromised the medial lemniscus and dentato-rubro-thalamic tracts, respectively. Lesions associated with adverse motor and speech effects encroached on the pyramidal tract. Lesions larger than 170 mm3 were associated with an increased risk of acute adverse effects. Tremor improvement and acute adverse effects of MRgFUS for essential tremor are highly dependent on the location and size of lesions. These novel findings could refine current MRgFUS treatment planning and targeting, thereby improving clinical outcomes in patients.