The putative transcriptional corepressor ETO/MTG8 has been extensively studied due to its involvement in a chromosomal translocation causing the t(8;21) form of acute myeloid leukemia. Despite this, the role of ETO in normal physiology has remained obscure. Here we show that ETO is highly expressed in preadipocytes and acts as an inhibitor of C/EBP during early adipogenesis, contributing to its characteristically delayed activation. ETO prevents both the transcriptional activation of the C/EBP␣ promoter by C/EBP and its concurrent accumulation in centromeric sites during early adipogenesis. ETO expression rapidly reduces after the initiation of adipogenesis, and this is essential to the normal induction of adipogenic gene expression. These findings define, for the first time, a molecular role for ETO in normal physiology as an inhibitor of C/EBP and a novel regulator of early adipogenesis.Adipose tissue is a key depot for the storage of energy as triglycerides and also plays a dynamic role in the regulation of metabolism (30). Studies of obese and lipodystrophic humans and rodents demonstrate that both increased and decreased adipose tissue mass are associated with insulin resistance and abnormal glucose and lipid metabolism (17,24,29). Thus, tight control of adipocyte development, size and insulin-sensitivity appears to be of critical importance in maintaining whole body energy homeostasis. The process of adipogenesis requires highly organized and precisely controlled expression of a cascade of transcription factors within the preadipocyte (25,32,35). The rapid and transient induction of the C/CAAT-enhancer binding proteins C/EBP and C/EBP␦ is one of the earliest steps in this process (35). These transcription factors bind to specific sequences in the promoters of C/EBP␣ and the nuclear hormone receptor PPAR␥,