Endosomal Sorting Complexes Required for Transport (ESCRTs) drive reverse topology membrane remodeling events including the formation of intralumenal vesicles within multivesicular bodies, the budding of retroviruses from the plasma membrane, and the scission of the cytokinetic bridge. It has been difficult to study the physiological relevance of this machinery in mammals because many contributing components are essential for viability. To bypass this problem we used combinations of knockout (−), hypomorphic (H) and wildtype (+) alleles to generate a series of mice with a gradual reduction of HD-PTP (product of PTPN23), an ESCRT-associated protein known to cause embryonic lethality when fully depleted. Whereas PTPN23−/H mice died shortly after birth, PTPN23H/H mice developed into adulthood but had reduced size, lipodystrophy, and shortened lifespan. Analysis of 14-day inguinal adipose tissue indicated reduced expression of adipogenesis markers, and PTPN23 knockout preadipocytes similarly display reduced adipogenesis in vitro. Defects in insulin-stimulated signaling were apparent in differentiated PTPN23 knockout adipocytes and PTPN23H/H inguinal adipose tissue in vitro, correlating with reduced levels of insulin signaling hallmarks observed in adult PTPN23H/H inguinal adipose tissue in vivo. Whereas the ESCRT machinery have been suggested to downregulate signaling, these results indicate that HD-PTP promotes insulin-induced signaling in, as well as differentiation of, inguinal adipose tissue. These results revealed unexpected roles for HD-PTP in promoting fat accumulation in mammalian cells through supporting insulin signaling, adipogenesis, and lipid droplet formation.