The orphan nuclear receptor chicken ovalbumin upstream promoter-transcription factor II (COUP-TFII; Nr2f2) is expressed in adipose tissue in vivo and declines during differentiation. Overexpression of COUP-TFII prevents adipogenesis, whereas shRNA-mediated reduction of COUP-TFII promotes differentiation, as shown by increased lipid accumulation and elevated expression of fat cell marker proteins. Furthermore, reduction of COUP-TFII allows uncommitted fibroblasts to be differentiated into fat cells. COUP-TFII represses the expression of a number of proadipogenic factors in adipocytes, with direct action noted at the CAAT enhancer-binding protein alpha promoter. We show that COUP-TFII acts downstream of hedgehog signaling and is required for the full antiadipogenic effect of this pathway. This effect is mediated in part by interaction with GATA factors. COUP-TFII and GATA2 are physically associated and repress target gene expression in an additive manner. Taken together, our data demonstrate that COUP-TFII represents an endogenous suppressor of adipogenesis, linking antiadipogenic extracellular signals to the core transcriptional cascade.