Craniopharyngiomas (CP) are rare brain tumors managed primarily with surgery and radiotherapy. There are 2 phenotypes of CP, i.e., one with a rather good outcome without hypothalamic damage and another with hypothalamic damage. With hypothalamic damage, progressive disease with recurrent operations and additional cranial radiotherapy often result in hypothalamic obesity, an affected psychosocial life, and cognitive dysfunction. The morbidity and mortality are increased for particularly cerebrovascular diseases. Preoperative hypothalamic involvement to predict hypothalamic damage is important for decision making for hypothalamus-sparing surgery. Also a postoperative hypothalamic damage evaluation with the use of hypothalamus volume measurement can predict hypothalamic obesity, which is important for early treatment options. The morbidity of CP includes cognitive dysfunction with attention deficits and impaired episodic memory and processing speed. Again patients with hypothalamic damage are more affected. Treatment options of hypothalamic obesity in the chronic phase are scarce and not convincingly successful. The most optimal situation is to try to hinder or stop the evolution of hypothalamic obesity. Prevention of hypothalamic damage is recommended, with special regard to hypothalamus-sparing therapeutic approaches that respect the integrity of essential nuclei located in both the medial and the posterior hypothalamic areas.