Objective Although genome wide association studies have partly uncovered the genetic basis of Crohn's disease (CD), it remains a challenge to link genetic polymorphisms to functional intestinal phenotypes. Paneth cells are specialised antimicrobial epithelial cells localised to the small-intestinal crypt-base. Here, we investigate whether genomic variations in ATG16L1 affect Paneth cell function. Design Genomic variation of ATG16L1 (T300A, rs2241880) was determined in DNA from 78 patients with CD and 12 healthy controls. Paraffin-embedded ileal biopsies from patients with genotype AA (n=17), GA (n=38) and patients with the GG allele (n=23) were stained for GRP78, phospho-EIF2 alpha, lysozyme, cleaved-caspase 3, phosphohistone H3, phospho-I kappa B, p65, phospho-p38MAPK and PHLDA1. Microbial composition of biopsies was assessed by PCR. Disease phenotype was scored. Results In patients with quiescent disease but with an ATG16L1 risk allele, the endoplasmic reticulum (ER) stress markers GRP78 and pEIF2 alpha were highly expressed in Paneth cells. Other CD risk gene variations did not correlate with Paneth cell ER stress. Functionally, patients with ER-stressed Paneth cells showed no changes in intestinal epithelial cells proliferation or apoptosis, Paneth cell or stem cell numbers, p65, phospho-I kappa B and phospho-p38 staining. However, a significantly increased presence of adherent-invasive Escherichia coli was observed in biopsies from patients with ER-stressed Paneth cells. Phenotypically, patients with GRP78 positive Paneth cells have relatively less colonic disease over ileal disease (-21%, p=0.04), more fistulas (+21%, p=0.05) and an increased need for intestinal surgery (+38%, p=0.002). Conclusions The ATG16L1 T300A polymorphism defines a specific subtype of patients with CD, characterised by Paneth cell ER stress even during quiescent disease. Paneth cell ER stress correlates with bacterial persistence, and is thus likely to modulate antimicrobial functionality of this cell type in patients with CD.