OBJECTIVE To determine whether adipocyte enhancer binding protein (AEBP) 1, a transcriptional repressor that is down-regulated during adipogenesis, functions as a critical regulator of adipose tissue homeostasis through modulation of phosphatase and tensin homolog deleted on chromosome ten (PTEN) tumor suppressor activity and mitogen-activated protein kinase (MAPK) activation. RESEARCH METHODS AND PROCEDURES We examined whether AEBP1 physically interacts with PTEN in 3T3-L1 cells by coimmunoprecipitation analysis. We generated AEBP1-null mice and examined the physiological role of AEBP1 as a key modulator of in vivo adiposity. Using adipose tissue from wild-type and AEBP1-null animals, we examined whether AEBP1 affects PTEN protein level. RESULTS AEBP1 interacts with PTEN, and deficiency of AEBP1 increases adipose tissue PTEN mass. AEBP1-null mice have reduced adipose tissue mass and enhanced apoptosis with suppressed survival signal. Primary pre-adipocytes from AEBP1-null adipose tissues exhibit lower basal MAPK activity with defective proliferative potential. AEBP1-null mice are also resistant to diet-induced obesity, suggesting a regulatory role for AEBP1 in energy homeostasis. DISCUSSION Our results suggest that AEBP1 negatively regulates adipose tissue PTEN levels, in conjunction with its role in proliferation and differentiation of pre-adipocytes, as a key functional role in modulation of in vivo adiposity.