We used an unbiased genome-wide approach to identify exonic variants segregating with diabetes in a multigenerational Finnish family. At least eight members of this family presented with diabetes with age of diagnosis ranging from 18 to 51 years and a pattern suggesting autosomal dominant inheritance. We sequenced the exomes of four affected members of this family and performed follow-up genotyping of additional affected and unaffected family members. We uncovered a novel nonsynonymous variant (p.Trp314Arg) in the Wolfram syndrome 1 (WFS1) gene that segregates completely with the diabetic phenotype. Multipoint parametric linkage analysis with 13 members of this family identified a single linkage signal with maximum logarithm of odds score 3.01 at 4p16.2-p16.1, corresponding to a region harboring the WFS1 locus. Functional studies demonstrate a role for this variant in endoplasmic reticulum stress, which is consistent with the β-cell failure phenotype seen in mutation carriers. This represents the first compelling report of a mutation in WFS1 associated with dominantly inherited nonsyndromic adult-onset diabetes.