Krüppel-like factor 5 (KLF5) is a zinc-finger transcription factor known to play a pivotal role in the pathogenesis of cardiovascular disease. Here, we show that neonatal heterozygous KLF5 knockout mice exhibit a marked deficiency in white adipose tissue development, suggesting that KLF5 is also required for adipogenesis. In 3T3-L1 preadipocytes, KLF5 expression was induced at an early stage of differentiation, and this was followed by expression of PPARgamma2. Constitutive overexpression of dominant-negative KLF5 inhibited adipocyte differentiation, whereas overexpression of wild-type KLF5 induced differentiation even without hormonal stimulation. Moreover, embryonic fibroblasts obtained from KLF5+/- mice showed much attenuated adipocyte differentiation, confirming the key role played by KLF5 in adipocyte differentiation. KLF5 expression is induced by C/EBPbeta and delta. KLF5, in turn, acts in concert with C/EBPbeta/delta to activate the PPARgamma2 promoter. This study establishes KLF5 as a key component of the transcription factor network controlling adipocyte differentiation.