Smith-Magenis syndrome (SMS) is a neurodevelopmental disorder characterized by cognitive and behavioral symptoms, obesity, and sleep disturbance. There is no therapy to alleviate its symptoms or delay disease onset. SMS occurs due to haploinsufficiency of the retinoic acid-induced-1 (RAI1) gene caused by either chromosomal deletion (SMS-del) or RAI1 missense/nonsense mutation. The molecular mechanisms underlying SMS are not known. Here, we generated and characterized primary cells derived from four SMS patients, two carrying SMS-del and two carrying RAI1 point mutations, and four control subjects to investigate the pathogenetic processes underlying SMS. By combining transcriptomic and lipidomic analyses, we show altered expression of lipid and lysosomal genes, deregulation of lipid metabolism, accumulation of lipid droplets, and a block of autophagic flux. SMS cells show increased cell death associated with mitochondrial pathology and reactive oxygen species production. Treatment with N-acetylcysteine reduces cell death and lipid accumulation, suggesting a causative link between metabolic dyshomeostasis and cell viability. Our results highlight the pathological processes in human SMS cells involving lipid metabolism, autophagy defects and mitochondrial dysfunction and suggest new potential therapeutic targets for patient treatment.