Mice deficient in C/EBP alpha have defective development of adipose tissue, but the precise role of C/EBP alpha has not been defined. Fibroblasts from C/EBP alpha(-/-) mice undergo adipose differentiation through expression and activation of PPAR gamma, though several clear defects are apparent. C/EBP alpha-deficient adipocytes accumulates less lipid, and they do not induce endogenous PPAR gamma, indicating that cross-regulation between C/EBP alpha and PPAR gamma is important in maintaining the differentiated state. The cells also show a complete absence of insulin-stimulated glucose transport, secondary to reduced gene expression and tyrosine phosphorylation for the insulin receptor and IRS-1. These results define multiple roles for C/EBP alpha in adipogenesis and show that cross-regulation between PPAR gamma and C/EBP alpha is a key component of the transcriptional control of this cell lineage.