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Loss-of-function mutations in hepatocyte nuclear factor 1A (HNF1A) are known to cause rare forms of diabetes and alter hepatic physiology through unclear mechanisms. In the general population, 1:100 individuals carry a rare, protein-coding variant, most of unknown functional consequence. To characterize the full allelic series, we performed deep mutational scanning of 11,970 protein-coding variants in human hepatocytes and clinical correlation with 553,246 exome-sequenced individuals. Surprisingly, we found that ∼1:5 rare protein-coding variants in the general population cause molecular gain of function (GOF), increasing the transcriptional activity of HNF1A by up to 50% and conferring protection from type 2 diabetes (odds ratio [OR] = 0.77, p = 0.007). Increased hepatic expression of promoted a pro-atherogenic serum profile mediated in part by enhanced transcription of risk genes including and . In summary, ∼1:300 individuals carry a GOF variant in that protects carriers from diabetes but enhances hepatic secretion of atherogenic lipoproteins.