Tumor necrosis factor alpha (TNFalpha) is a potent cytokine with multiple biological activities and exists in two forms as follows: a 17-kDa soluble form that is a cleaved product of the 26-kDa transmembrane form (mTNFalpha). It has been suggested that the transmembrane form of TNFalpha is mainly responsible for localized responses via cell-cell contact. Here, we have examined the activities of transmembrane TNFalpha in cultured adipocytes. A non-cleavable transmembrane form of TNFalpha (mTNFDelta1-9K11E) was expressed in several preadipocyte cell lines using retroviral gene transfer. In wild type preadipocytes carrying both TNF receptors, expression of mTNFDelta1-9K11E resulted in inhibition of the differentiation program. The extent of this varied depending on the nature and strength of the adipogenic stimuli. The TNF receptor responsible for this function was determined by expressing mTNFDelta1-9K11E in preadipocyte cell lines lacking either TNF receptor 1 (TNFR1), 2 (TNFR2), or both. In order to confirm the results in the same cellular background, TNF receptors were also reconstituted in the cell lines lacking corresponding receptors. These experiments demonstrated that TNFR1 was necessary and sufficient for mediating mTNFDelta1-9K11E-induced inhibition of adipogenesis and that this action was similar to that of soluble TNFalpha. In conclusion, our results indicate that mTNFDelta1-9K11E is biologically active in cultured adipocytes and can alter the adipogenic program of these cells by selectively activating TNFR1. This may have physiological implications where local TNFalpha actions are thought to be generated at sites such as adipose tissue.