Maternal adiponectin levels are inversely correlated with birth weight, and adiponectin infusion in pregnant mice down-regulates placental nutrient transporters and decreases fetal growth. In contrast to the insulin sensitizing effects in adipose tissue and muscle, adiponectin inhibits insulin signaling in the placenta. However the molecular mechanisms involved are unknown. We hypothesized that adiponectin inhibits insulin signaling and insulin-stimulated amino acid transport in primary human trophoblasts by peroxisome proliferator-activated receptor-α (PPARα) mediated ceramide synthesis. Primary human term trophoblast cells were treated with adiponectin and/or insulin. Adiponectin increased the phosphorylation of p38 mitogen-activated protein kinase (p38 MAPK) and PPARα. Adiponectin inhibited insulin signaling and insulin-stimulated amino acid transport. This effect was dependent on PPARα, as activation of PPARα with an agonist (GW7647) inhibited insulin signaling and function, whereas PPARα-siRNA reversed the effects of adiponectin on the insulin response. Adiponectin increased ceramide synthase expression and stimulated ceramide production. C2-ceramide inhibited insulin signaling and function, while inhibition of ceramide synthase (with Fumonisin B1) reversed the effects of adiponectin on insulin signaling and amino acid transport. These findings are consistent with the model that maternal adiponectin limits fetal growth mediated by activation of placental PPARα and ceramide synthesis, which inhibits placental insulin signaling and amino acid transport, resulting in reduced fetal nutrient availability.