Prader-Willi Syndrome (PWS) is a complex neurogenetic disorder caused by loss of the paternal 15q11.2-q13 locus, due to deletion (DEL), maternal uniparental disomy (mUPD), or imprinting center defects. Individuals with mUPD have up to 60% risk of developing psychosis in early adulthood. Given the increasing evidence for white matter abnormalities in psychotic disorders, we investigated white matter microstructure in children and adolescents with PWS, with a particular emphasis on the DEL and mUPD subtypes. Magnetic resonance diffusion weighted images were acquired in 35 directions at 3T and analyzed using fractional anisotropy (FA), mean, axial, and radial diffusivity (MD, AD, RD) values obtained by tract-based spatial statistics (TBSS) in 28 children and adolescents with PWS and 61 controls. In addition, we employed a recently developed white matter pothole approach, which does not require local FA differences to be spatially co-localized across subjects. After accounting for age and gender, individuals with PWS had significantly lower global FA and higher MD, compared with controls. Individuals with mUPD had lower FA in multiple regions including the corpus callosum, cingulate, and superior longitudinal fasciculus and larger potholes, compared with DEL and controls. The observed differences in individuals with mUPD are similar to the white matter abnormalities in individuals with psychotic disorders. Conversely, the subtle white matter abnormalities in individuals with DEL are consistent with their substantially lower risk of psychosis. Future studies to investigate the specific neurobiological mechanism underlying the differential psychosis risk between the DEL and mUPD subtypes of PWS are highly warranted.