Adipocytes have highly specialized function of accumulating fat as stored energy that can be used during periods of food deprivation. The process of fat synthesis and development of adipose tissue are under hormonal and nutritional control. This review first describes transcription of the two critical enzymes involved in fat synthesis, fatty acid synthase and mitochondrial glycerol-3-phosphate acyltransferase, is decreased to an undetectable level during fasting. Food intake, especially a high carbohydrate, fat-free diet, subsequent to fasting causes dramatic increase in transcription of these genes. Insulin secretion is increased during feeding, having a positive effect, whereas cAMP, which mediates the effect of glucagon which increases during fasting, has a negative effect on transcription of these genes. Using adipocytes in culture and in transgenic mice that express liciferase driven by the fatty acid synthase promoter, cis-acting and trans-acting factors that may mediate the transcriptional regulation were examined. Upstream stimulatory factors (USFs) that bind to -65 E-box are required for insulin-mediated transcriptional activation of the fatty acid synthase gene. This review next describes how pref-1 is a novel inhibitor of adipose differentiation and is a plasma membrane protein containing six EGF-repeats in the extracellular domain. Pref-1 is highly expressed in 3T3-L1 preadipocytes, but is not detectable in mature fat cells. Down regulation of pref-1 is required for adipose differentiation, and constitutive expression of pref-1 inhibits adipogenesis. Moreover, the ectodomain of pref-1 is cleaved to generate a biologically active 50 kDa soluble form. There are four major forms of membrane pref-1 resulting from alternate splicing, but two of the forms with a larger deletion do not produce biologically active soluble form, indicating that alternate splicing determines the range of action, juxtacrine or paracrine, of the pref-1.