Mammalian white adipocytes have a unique structure in which nearly the entire cell volume is occupied by a single large lipid droplet, while the surrounding cytoplasm occupies minimal space. The massive cytoplasmic remodeling processes involved in the formation of this unique cellular structure are poorly defined. Autophagy is a membrane trafficking process leading to lysosomal degradation of cytoplasmic components. Here, we investigated the functional role of atg5, a gene encoding an essential protein required for autophagy, in adipocyte differentiation in a cellular model and in mice. Massive autophagy was activated when wild-type primary mouse embryonic fibroblasts (MEFs) were induced for adipocyte differentiation. Importantly, the autophagy deficient primary atg5(-/-) MEFs exhibited dramatically reduced efficiency in adipogenesis. Time-lapse microscopy revealed that atg5(-/-) MEFs initially appeared to differentiate normally; however, a majority of the differentiating atg5(-/-) cells ultimately failed to undergo further morphological transformation and eventually died, likely through apoptosis. Consistent with these in vitro results, histological analysis revealed that the atg5(-/-) late-stage embryos and neonatal pups had much less subcutaneous perilipin A-positive adipocytes. Consistently, when treated with chloroquine, a functional inhibitor of autophagy, wild-type MEFs exhibited drastically reduced efficiency of adipocyte differentiation. Taken together, these findings demonstrated that Atg5 is involved in normal adipocyte differentiation, suggesting an important role of autophagy in adipogenesis.