Multisystem inflammatory syndrome in children (MIS-C) is a rare condition following SARS-CoV-2 infection associated with intestinal manifestations. Genetic predisposition, including inborn errors of the OAS-RNAseL pathway, has been reported. We sequenced 154 MIS-C patients and utilized a novel statistical framework of gene burden analysis, “burdenMC,” which identified an enrichment for rare predicted-deleterious variants in BTNL8 (OR = 4.2, 95% CI: 3.5-5.3, P < 10-6). BTNL8 encodes an intestinal epithelial regulator of Vγ4+γδ T cells implicated in regulating gut homeostasis. Enrichment was exclusive to MIS-C, being absent in patients with COVID-19 or bacterial disease. Using an available functional test for BTNL8, rare variants from a larger cohort of MIS-C patients (n = 835) were tested which identified eight variants in 18 patients (2.2%) with impaired engagement of Vγ4+γδ T cells. Most of these variants were in the B30.2 domain of BTNL8 implicated in sensing epithelial cell status. These findings were associated with altered intestinal permeability, suggesting a possible link between disrupted gut homeostasis and MIS-C-associated enteropathy triggered by SARS-CoV-2.