Obesity in children has become an epidemic in the U.S. and is particularly prominent in minority populations such as Mexican-Americans. In addition to physical activity and diet, genetics also plays a role in obesity etiology. A few studies in adults and adolescents suggest a link between obesity and paraoxonase 1 (PON1), a multifunctional enzyme that can metabolize organophosphate pesticides and also has antioxidant properties. We determined PON1192 genotype and arylesterase levels (ARYase, measure of PON1 enzyme quantity), to characterize the relationship between PON1 and obesity in young Mexican-American children (n = 373) living in an agricultural community in California. Since PON1 polymorphisms and obesity both vary between ethnic groups, we estimated proportional genetic ancestry using 106 ancestral informative markers (AIMs). Among children, PON1192 allele frequencies were 0.5 for both alleles, and the prevalence of obesity was high (15% and 33% at ages two and five, respectively). The average proportion of European, African, and Native American ancestry was 0.40, 0.09, and 0.51, yet there was wide inter-individual variation. We found a significantly higher odds of obesity (9.3 and 2.5- fold) in PON1192QQ children compared to PON1192RR children at ages two and five, respectively. Similar relationships were seen with BMI Z-scores at age two and waist circumference at age five. After adjusting for genetic ancestry in models of PON1 and BMI Z-score, effect estimates for PON1192 genotype changed 15% and 9% among two and five year old children, respectively, providing evidence of genetic confounding by population stratification. However even after adjustment for genetic ancestry, the trend of increased BMI Z-scores with increased number of PON1192 Q alleles remained. Our findings suggest that PON1 may play a role in obesity independent of genetic ancestry and that studies of PON1 and health outcomes, especially in admixed populations, should account for differences due to population stratification.