The molecular effects of obesity are mediated by alterations in the levels of adipocytokines. High leptin level associated with obese state is a major cause of breast cancer progression and metastasis, whereas adiponectin is considered a "guardian angel adipocytokine" for its protective role against various obesity-related pathogenesis including breast cancer. In the present study, investigating the role of adiponectin as a potential inhibitor of leptin, we show that adiponectin treatment inhibits leptin-induced clonogenicity and anchorage-independent growth. Leptin-stimulated migration and invasion of breast cancer cells is also effectively inhibited by adiponectin. Analyses of the underlying molecular mechanisms reveal that adiponectin suppresses activation of two canonical signaling molecules of leptin signaling axis: extracellular signal-regulated kinase (ERK) and Akt. Pretreatment of breast cancer cells with adiponectin protects against leptin-induced activation of ERK and Akt. Adiponectin increases expression and activity of the physiological inhibitor of leptin signaling, protein tyrosine phosphatase 1B (PTP1B), which is found to be integral to leptin-antagonist function of adiponectin. Inhibition of PTP1B blocks adiponectin-mediated inhibition of leptin-induced breast cancer growth. Our in vivo studies show that adenovirus-mediated adiponectin treatment substantially reduces leptin-induced mammary tumorigenesis in nude mice. Exploring therapeutic strategies, we demonstrate that treatment of breast cancer cells with rosiglitazone results in increased adiponectin expression and inhibition of migration and invasion. Rosiglitazone treatment also inhibits leptin-induced growth of breast cancer cells. Taken together, these data show that adiponectin treatment can inhibit the oncogenic actions of leptin through blocking its downstream signaling molecules and raising adiponectin levels could be a rational therapeutic strategy for breast carcinoma in obese patients with high leptin levels.