Insulin-like growth factor binding protein-3 (IGFBP-3) interacts with the type II nuclear receptors, retinoid X receptor (RXR)- and retinoic acid receptor- and modulates their transcriptional activity. Peroxisome proliferator-activated receptor (PPAR)-, a related nuclear receptor which dimerizes with RXR-, plays an important role in adipocyte differentiation. IGFBP-3 is regulated during adipocyte differentiation but its role in this process is unknown. We demonstrate that IGFBP-3 interferes with the PPAR--dependent processes of adipocyte differentiation and maintenance of the gene expression characteristic of mature adipocytes. Treatment of adipocytes with exogenous IGFBP-3, but not an IGFBP-3 mutant that does not bind RXR- or PPAR-, decreased markers of adipocyte differentiation, PPAR- and resistin, but increased the preadipocyte marker, plasminogen activator inhibitor-1. Further, expression of human IGFBP-3, but not the IGFBP-3 mutant, by preadipocytes inhibited preadipocyte differentiation as determined by gene markers and lipid accumulation. IGFBP-3 interacted with PPAR- in vitro and in 3T3-L1 adipocyte lysates, and inhibited PPAR- heterodimerization with RXR- in vitro. Wildtype IGFBP-3, but not mutant IGFBP-3, blocked ligand-induced transactivation of PPAR response element in 3T3-L1 cells. The observation that IGFBP-3 inhibits adipocyte differentiation and impacts on the PPAR- system suggests a role for IGFBP-3 in the pathogenesis of obesity and insulin resistance.