Systematically predicting gene (or protein) function based on molecular interaction networks has become an important tool in refining and enhancing the existing annotation catalogs, such as the Gene Ontology (GO) database. However, functional labels with only a few (<10) annotated genes, which constitute about half of the GO terms in yeast, mouse and human, pose a unique challenge in that any prediction algorithm that independently considers each label faces a paucity of information and thus is prone to capture non-generalizable patterns in the data, resulting in poor predictive performance. There exist a variety of algorithms for function prediction, but none properly address this overfitting issue of sparsely annotated functions, or do so in a manner scalable to tens of thousands of functions in the human catalog.