Adipocyte determination and differentiation-dependent factor 1 (ADD1) is a member of the basic helix-loop-helix leucine zipper (bHLH-LZ) family of transcription factors that binds to two distinct DNA sequences and has been associated with both adipocyte development and cholesterol homeostasis (where it has been termed SREBP1). To investigate the biological role of ADD1, we expressed wild-type and dominant negative forms of this protein with retroviral vectors in preadipocytes and nonadipogenic cells. A dominant-negative form of ADD1 with a point mutation in the DNA-binding domain sharply represses the differentiation of 3T3-L1 cells as observed morphologically or by the expression of adipocyte-specific mRNAs. When NIH-3T3 cells ectopically expressing ADD1 are cultured under hormonal conditions not favoring differentiation, they do not overtly differentiate but still activate expression of mRNAs for fatty acid synthase (FAS) and lipoprotein lipase (LPL), two key genes that regulate fatty acid metabolism. Under culture conditions permissive for differentiation including a PPAR activator, 15%-20% of the cells expressing ADD1 undergo adipogenesis while 2%-3% of cells containing a control vector differentiate. Simultaneous expression of ADD1 with PPARgamma increases the transcriptional activity of this adipogenic nuclear hormone receptor, suggesting involvement of ADD1 in this pathway. These data indicate that ADD1 plays an important role in fat cell gene expression and differentiation, and suggest that it may function by augmenting a step in PPARgamma-mediated transcription.