Nuclear factor E2-related factor 2 (Nrf2) is a cap-n-collar basic leucine zipper (CNC-bZIP) transcription factor that is well established as a master regulator of phase II detoxification and antioxidant gene expression and is strongly expressed in tissues involved in xenobiotic metabolism including liver and kidney. Nrf2 is also abundantly expressed in adipose tissue; however, the exact function of Nrf2 in adipocyte biology is unclear. In the current study we show that targeted knock-out of Nrf2 in mice decreases adipose tissue mass, promotes formation of small adipocytes, and protects against weight gain and obesity otherwise induced by a high fat diet. In mouse embryonic fibroblasts, 3T3-L1 cells, and human subcutaneous preadipocytes, selective deficiency of Nrf2 impairs adipocyte differentiation. Deficiency of Nrf2 also leads to decreased expression of peroxisome proliferator-activated receptor gamma (PPARgamma), CCAAT enhancer-binding protein alpha (C/EBPalpha), and their downstream targets during adipocyte differentiation. Conversely, activation of Nrf2 in 3T3-L1 cells by stable knockdown of its negative regulator Keap1 enhances and accelerates hormone-induced adipocyte differentiation. Transfection of Nrf2 stimulates Ppargamma promoter activity, and stable knockdown of Keap1 enhances PPARgamma expression in 3T3-L1 cells. In addition, chromatin immunoprecipitation studies show that Nrf2 associates with consensus binding sites for Nrf2 in the Ppargamma promoter. These findings demonstrate a novel biologic role for Nrf2 beyond its participation in detoxification and antioxidant pathways and place Nrf2 within the limited network of transcription factors that control adipocyte differentiation by regulating expression of PPARgamma.