Brown adipose tissue plays an important role in obesity, insulin resistance, and diabetes. We have previously shown that the transition from brown preadipocytes to mature adipocytes is mediated in part by insulin receptor substrate (IRS)-1 and the cell cycle regulator protein necdin. In this study, we used pharmacological inhibitors and adenoviral dominant negative constructs to demonstrate that this transition involves IRS-1 activation of Ras and ERK1/2, resulting in phosphorylation of cAMP response element-binding protein (CREB) and suppression of necdin expression. This signaling did not include an elevation of intracellular calcium. A constitutively active form of CREB expressed in IRS-1 knockout cells decreased necdin promoter activity, necdin mRNA, and necdin protein levels, leading to a partial restoration of differentiation. By contrast, forkhead box protein (Fox)O1, which is regulated by the phosphoinositide 3 kinase-Akt pathway, increased necdin promoter activity. Based on reporter gene assays using truncations of the necdin promoter and chromatin immunoprecipitation studies, we demonstrated that CREB and FoxO1 are recruited to the necdin promoter, likely interacting with specific consensus sequences in the proximal region. Based on these results, we propose that insulin/IGF-I act through IRS-1 phosphorylation to stimulate differentiation of brown preadipocytes via two complementary pathways: 1) the Ras-ERK1/2 pathway to activate CREB and 2) the phosphoinositide 3 kinase-Akt pathway to deactivate FoxO1. These two pathways combine to decrease necdin levels and permit the clonal expansion and coordinated gene expression necessary to complete brown adipocyte differentiation.