Tumor necrosis factor alpha (TNF alpha) is a polypeptide hormone with pleiotropic effects on cellular proliferation and differentiation. To investigate how TNF alpha inhibits and reverses adipocyte differentiation, we studied the expression of two factors involved in the adipocyte differentiation process. Peroxisome proliferator-activated receptor gamma (PPARgamma) is a positive regulator of adipogenesis, whereas preadipocyte factor 1 (Pref-1) inhibits adipocyte differentiation. The expression patterns of both PPARgamma and Pref-1 change during early stages of adipocyte differentiation. Decreased expression of Pref-1 and increased expression of PPARgamma occur 1 day and 2 days, respectively, after 3T3-L1 cells reach confluence. During TNF alpha-mediated inhibition of adipocyte differentiation, PPARgamma messenger RNA (mRNA) expression stays at low levels. In contrast, TNF alpha treatment has no effect on the normal decrease in Pref-1 gene expression that occurs during adipogenesis. We observed that certain cytokine and growth factors [such as TNF alpha, basic fibroblast growth factor, transforming growth factor beta, and protein kinase C-activating agents plus calcium ionophore], when added to differentiated adipocytes, cause rapid down-regulation of PPARgamma mRNA expression with concomitant decrease in adipocyte-specific gene expression but fail to increase Pref-1 mRNA expression. Moreover, addition of TNF alpha to fully differentiated adipocytes results in the rapid disappearance of PPARgamma protein expression and the rapid loss of PPARgamma DNA-binding activity. Therefore, Pref-1 seems to function as a nonreversible molecular checkpoint whose expression is insensitive to TNF alpha-generated signals, whereas PPARgamma expression remains sensitive to TNF alpha at all stages of the adipogenesis program. Our results support the notion that dedifferentiated adipocytes and preadipocytes are not identical, though they share many similar morphological and gene expression patterns.