Large-scale genome sequencing is poised to provide a substantial increase in the rate of discovery of disease-associated mutations, but the functional interpretation of such mutations remains challenging. Here we show that deletions of a sequence on human chromosome 16 that we term the intestine-critical region (ICR) cause intractable congenital diarrhoea in infants(1,2). Reporter assays in transgenic mice show that the ICR contains a regulatory sequence that activates transcription during the development of the gastrointestinal system. Targeted deletion of the ICR in mice caused symptoms that recapitulated the human condition. Transcriptome analysis revealed that an unannotated open reading frame (Percc1) flanks the regulatory sequence, and the expression of this gene was lost in the developing gut of mice that lacked the ICR. Percc1-knockout mice displayed phenotypes similar to those observed upon ICR deletion in mice and patients, whereas an ICR-driven Percc1 transgene was sufficient to rescue the phenotypes found in mice that lacked the ICR. Together, our results identify a gene that is critical for intestinal function and underscore the need for targeted in vivo studies to interpret the growing number of clinical genetic findings that do not affect known protein-coding genes.