Adipose-specific inactivation of both AP-1 and CCAAT-enhancer-binding protein (C/EBP) families of B-ZIP transcription factors in transgenic mice causes severe lipoatrophy. To evaluate whether inactivation of only C/EBP members was critical for lipoatrophy, A-C/EBP, a dominant-negative protein that specifically inhibits the DNA binding of the C/EBP members, was expressed in adipose tissue. For the first 2 weeks after birth, aP2-A-C/EBP mice had no white adipose tissue (WAT), drastically reduced brown adipose tissue (BAT), and exhibited marked hepatic steatosis, hyperinsulinemia, and hyperlipidemia. However, WAT appeared during the third week, coinciding with significantly improved metabolic functioning. In adults, BAT remained reduced, causing cold intolerance. At 30 weeks, the aP2-A-C/EBP mice had only 35% reduced WAT, with clear morphological signs of lipodystrophy in subcutaneous fat. Circulating leptin and adiponectin levels were less than the wild-type levels, and these mice exhibited impaired triglyceride clearance. Insulin resistance, glucose intolerance, and reduced free fatty acid release in response to β3-adrenergic agonist suggest improper functioning of the residual WAT. Gene expression analysis of inguinal WAT identified reduced mRNA levels of several enzymes involved in fatty acid synthesis and glucose metabolism that are known C/EBPα transcriptional targets. There were increased levels for genes involved in inflammation and muscle differentiation. However, when dermal fibroblasts from aP2-A-C/EBP mice were differentiated into adipocytes in tissue culture, muscle markers were elevated more than the inflammatory markers. These results demonstrate that the C/EBP family is essential for adipose tissue development during the early postnatal period, the regulation of glucose and lipid homeostasis in adults, and the suppression of the muscle lineage.