A mitochondrial protein called uncoupling protein (UCP1) plays an important role in generating heat and burning calories by creating a pathway that allows dissipation of the proton electrochemical gradient across the inner mitochondrial membrane in brown adipose tissue, without coupling to any other energy-consuming process. This pathway has been implicated in the regulation of body temperature, body composition and glucose metabolism. However, UCP1-containing brown adipose tissue is unlikely to be involved in weight regulation in adult large-size animals and humans living in a thermoneutral environment (one where an animal does not have to increase oxygen consumption or energy expenditure to lose or gain heat to maintain body temperature), as there is little brown adipose tissue present. We now report the discovery of a gene that codes for a novel uncoupling protein, designated UCP2, which has 59% amino-acid identity to UCP1, and describe properties consistent with a role in diabetes and obesity. In comparison with UCP1, UCP2 has a greater effect on mitochondrial membrane potential when expressed in yeast. Compared to UCP1, the gene is widely expressed in adult human tissues, including tissues rich in macrophages, and it is upregulated in white fat in response to fat feeding. Finally, UCP2 maps to regions of human chromosome 11 and mouse chromosome 7 that have been linked to hyperinsulinaemia and obesity. Our findings suggest that UCP2 has a unique role in energy balance, body weight regulation and thermoregulation and their responses to inflammatory stimuli.