Insulin-like growth factor-binding protein-3 (IGFBP-3) interacts with the type II nuclear receptors retinoid X receptor (RXR)alpha and retinoic acid receptor-alpha and modulates their transcriptional activity. Peroxisome proliferator-activated receptor (PPAR)gamma, a related nuclear receptor that dimerizes with RXRalpha, 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 PPARgamma-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 RXRalpha or PPARgamma, decreased markers of adipocyte differentiation, PPARgamma, and resistin but increased the preadipocyte marker plasminogen activator inhibitor-1. Furthermore, 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 PPARgamma in vitro and in 3T3-L1 adipocyte lysates and inhibited PPARgamma heterodimerization with RXRalpha in vitro. Wild-type 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 PPARgamma system suggests a role for IGFBP-3 in the pathogenesis of obesity and insulin resistance.