Tumor necrosis factor α (TNFα) is a polypeptide hormone with pleiotropic effects on cellular proliferation and differentiation. To investigate how TNFα inhibits and reverses adipocyte differentiation, we studied the expression of two factors involved in the adipocyte differentiation process. Peroxisome proliferator-activated receptor γ (PPARγ) is a positive regulator of adipogenesis, whereas preadipocyte factor 1 (Pref-1) inhibits adipocyte differentiation. The expression patterns of both PPARγ and Pref-1 change during early stages of adipocyte differentiation. Decreased expression of Pref-1 and increased expression of PPARγ occur 1 day and 2 days, respectively, after 3T3-L1 cells reach confluence. During TNFα-mediated inhibition of adipocyte differentiation, PPARγ messenger RNA (mRNA) expression stays at low levels. In contrast, TNFα treatment has no effect on the normal decrease in Pref-1 gene expression that occurs during adipogenesis. We observed that certain cytokine and growth factors[ such as TNFα, basic fibroblast growth factor, transforming growth factor β, and protein kinase C-activating agents plus calcium ionophore], when added to differentiated adipocytes, cause rapid down-regulation of PPARγ mRNA expression with concomitant decrease in adipocyte-specific gene expression but fail to increase Pref-1 mRNA expression. Moreover, addition of TNFα to fully differentiated adipocytes results in the rapid disappearance of PPARγ protein expression and the rapid loss of PPARγ DNA-binding activity. Therefore, Pref-1 seems to function as a nonreversible molecular checkpoint whose expression is insensitive to TNFα-generated signals, whereas PPARγ expression remains sensitive to TNFα at all stages of the adipogenesis program. Our results support the notion that dedifferentiated adipocytes and preadipocytes are not identical, though they share many similar morphological and gene expression patterns.