A shift from osteoblastogenesis to adipogenesis is one of the underlying mechanisms of decreased bone mass and increased fat during aging. We now uncover a new role for the transcription factor Fra-1 in suppressing adipogenesis. Indeed, Fra1 (Fosl1) transgenic (Fra1tg) mice, which developed progressive osteosclerosis as a result of accelerated osteoblast differentiation, also developed a severe general lipodystrophy. The residual fat of these mice appeared immature and expressed lower levels of adipogenic markers, including the fatty acid transporter Cd36 and the CCAAT/enhancer binding protein Cebpa. Consequently accumulation of triglycerides and free fatty acids were detected in the serum of fasting Fra1tg mice. Fra-1 acts cell autonomously because the adipogenic differentiation of Fra1 transgenic primary osteoblasts was drastically reduced, and overexpression of Fra-1 in an adipogenic cell line blocked their differentiation into adipocytes. Strikingly, Cebpa was downregulated in the Fra-1-overexpressing cells and Fra-1 could bind to the Cebpa promoter and directly suppress its activity. Thus, our data add to the known common systemic control of fat and bone mass, a new cell-autonomous level of control of cell fate decision by which the osteogenic transcription factor Fra-1 opposes adipocyte differentiation by inhibiting C/EBPα.