Family-based linkage analysis has been a powerful tool for identification of genes contributing to traits with monogenic patterns of inheritance. These approaches have been of limited utility in identification of genes underlying complex traits. In contrast, searches for common genetic variants associated with complex traits have been highly successful. It is now widely recognized that common variations frequently explain only part of the inter-individual variation in populations. 'Rare' genetic variants have been hypothesized to contribute significantly to phenotypic variation in the population. We have developed a combination of family-based linkage, whole-exome sequencing, direct sequencing and association methods to efficiently identify rare variants of large effect. Key to the successful application of the method was the recognition that only a few families in a sample contribute significantly to a linkage signal. Thus, a search for mutations can be targeted to a small number of families in a chromosome interval restricted to the linkage peak. This approach has been used to identify a rare (1.1%) G45R mutation in the gene encoding adiponectin, ADIPOQ. This variant explains a strong linkage signal (LOD > 8.0) and accounts for ∼17% of the variance in plasma adiponectin levels in a sample of 1240 Hispanic Americans and 63% of the variance in families carrying the mutation. Individuals carrying the G45R mutation have mean adiponectin levels that are 19% of non-carriers. We propose that rare variants may be a common explanation for linkage peaks observed in complex trait genetics. This approach is applicable to a wide range of family studies and has potential to be a discovery tool for identification of novel genes influencing complex traits.