To investigate the role of GRP78 in adipogenesis and metabolic homeostasis, we knocked down GRP78 in mouse embryonic fibroblasts and 3T3-L1 preadipocytes induced to undergo differentiation into adipocytes. We also created an adipose Grp78-knockout mouse utilizing the aP2 (fatty acid binding protein 4) promoter-driven Cre-recombinase. Adipogenesis was monitored by molecular markers and histology. Tissues were analyzed by micro-CT and electron microscopy. Glucose homeostasis and cytokine analysis were performed. Our results indicate that GRP78 is essential for adipocyte differentiation in vitro. aP2-cre-mediated GRP78 deletion leads to lipoatrophy with ∼90% reduction in gonadal and subcutaneous white adipose tissue and brown adipose tissue, severe growth retardation, and bone defects. Despite severe abnormality in adipose mass and function, adipose Grp78-knockout mice showed normal plasma triglyceride levels, and plasma glucose and insulin levels were reduced by 40-60% compared to wild-type mice, suggesting enhanced insulin sensitivity. The endoplasmic reticulum is grossly expanded in the residual mutant white adipose tissue. Thus, these studies establish that GRP78 is required for adipocyte differentiation, glucose homeostasis, and balanced secretion of adipokines. Unexpectedly, the phenotypes and metabolic parameters of the mutant mice, which showed early postnatal mortality, are uniquely distinct from previously characterized lipodystrophic mouse models.