The increase of adipose tissue mass associated with obesity is due in part to an increase in the number of adipocytes. This hyperplasia results from recruitment of pluripotent stem cells present in the vascular stroma of adipose tissue. A model cell culture system has been developed that recapitulates this process both ex vivo and in vivo. After treatment of pluripotent C3H10T1/2 stem cells with bone morphogenic protein 4 (BMP4) during proliferation followed by differentiation inducers at growth arrest, the cells synchronously enter S phase and undergo mitotic clonal expansion, a hallmark of preadipocyte differentiation. Upon exiting the cell cycle, these cells express adipocyte markers and acquire adipocyte characteristics at high frequency. C3H10T1/2 cells treated with BMP4 in cell culture and implanted s.c. into athymic mice develop into tissue indistinguishable from adipose tissue in normal fat depots. We interpret the findings as evidence that BMP4 is capable of triggering commitment of pluripotent C3H10T1/2 stem cells to the adipocyte lineage.