Adiponectin is exclusively expressed in differentiated adipocytes and plays an important role in regulating energy homeostasis, including the glucose and lipid metabolism associated with increased insulin sensitivity. However, the control of adiponectin gene expression in adipocytes is poorly understood. We show here that levels of adiponectin mRNA and protein are reduced in the white adipose tissue of ob/ob and db/db mice and that there is a concomitant reduction of the adipocyte determination- and differentiation-dependent factor 1 (ADD1)/sterol regulatory element-binding protein 1c (SREBP1c) transcription factor. To determine whether ADD1/SREBP1c regulates adiponectin gene expression, we isolated and characterized the mouse adiponectin promoter. Analysis of the adiponectin promoter revealed putative binding sites for the adipogenic transcription factors ADD1/SREBP1c, peroxisomal proliferator-activated receptor gamma and CCAAT enhancer-binding proteins. DNase I footprinting and chromatin immunoprecipitation analyses revealed that ADD1/SREBP1c binds in vitro and in vivo to the proximal promoter containing sterol regulatory element (SRE) motifs. A luciferase reporter containing the promoter was transactivated by ADD1/SREBP1c, and introduction of SRE mutations into the construct abolished transactivation. Adenoviral overexpression of ADD1/SREBP1c also elevated adiponectin mRNA and protein levels in 3T3-L1 adipocytes. Furthermore, insulin stimulated adiponectin mRNA expression in adipocytes and augmented transactivation of the adiponectin promoter by ADD1/SREBP1c. Taken together, these data indicate that ADD1/SREBP1c controls adiponectin gene expression in differentiated adipocytes.