Background Thymidine phosphorylase (TP), encoded by the TYMP gene, is a cytosolic enzyme essential for the nucleotide salvage pathway. TP catalyzes the phosphorylation of the deoxyribonucleosides, thymidine and 2′-deoxyuridine, to thymine and uracil. Biallelic TYMP variants are responsible for Mitochondrial NeuroGastroIntestinal Encephalomyopathy (MNGIE), an autosomal recessive disorder characterized in most patients by gastrointestinal and neurological symptoms, ultimately leading to death. Studies on the impact of TYMP variants in cellular systems with relevance to the organs affected in MNGIE are still scarce and the role of TP in adipose tissue remains unexplored. Methods Deep phenotyping was performed in three patients from two families carrying homozygous TYMP variants and presenting with lipoatrophic diabetes. The impact of the loss of TP expression was evaluated using a CRISPR-Cas9-mediated TP knockout (KO) strategy in human adipose stem cells (ASC), which can be differentiated into adipocytes in vitro. Protein expression profiles and cellular characteristics were investigated in this KO model. Results All patients had TYMP loss-of-function variants and first presented with generalized loss of adipose tissue and insulin-resistant diabetes. CRISPR-Cas9-mediated TP KO in ASC abolished adipocyte differentiation and decreased insulin response, consistent with the patients’ phenotype. This KO also induced major oxidative stress, altered mitochondrial functions, and promoted cellular senescence. This translational study identifies a new role of TP by demonstrating its key regulatory functions in adipose tissue. Conclusions The implication of TP variants in atypical forms of monogenic diabetes shows that genetic diagnosis of lipodystrophic syndromes should include TYMP analysis. The fact that TP is crucial for adipocyte differentiation and function through the control of mitochondrial homeostasis highlights the importance of mitochondria in adipose tissue biology. Supplementary Information The online version contains supplementary material available at 10.1186/s12916-022-02296-2.