Hypothalamic neuropeptide Y (NPY) has been implicated in control of energy balance, but the physiological importance of NPY in the dorsomedial hypothalamus (DMH) remains unclear. Here we report that knockdown of NPY expression in the DMH by adeno-associated virus-mediated RNAi reduced fat depots in rats fed regular chow and ameliorated high-fat diet-induced hyperphagia and obesity. DMH NPY knockdown resulted in development of brown adipocytes in inguinal white adipose tissue through the sympathetic nervous system. This knockdown increased uncoupling protein 1 expression in both inguinal fat and interscapular brown adipose tissue (BAT). Consistent with the activation of BAT, DMH NPY knockdown increased energy expenditure and enhanced the thermogenic response to a cold environment. This knockdown also increased locomotor activity, improved glucose homeostasis, and enhanced insulin sensitivity. Together, these results demonstrate critical roles of DMH NPY in body weight regulation through affecting food intake, body adiposity, thermogenesis, energy expenditure, and physical activity.