Microarray analysis was performed to find a new group of genes or pathways that might be important in adipocyte development and metabolism. Among them, a mouse interferon-stimulated gene 12b1 (ISG12b1) is expressed at a 400-fold higher level in adipocytes compared with stromal-vascular cells. It is predominantly expressed in adipose tissue among other tissues we tested. Developmentally, ISG12b1 mRNA expression was initially inhibited followed by a dramatic induction during both in vivo and in vitro adipogenic differentiation. Adenovirus-mediated overexpression of ISG12b1 inhibited adipogenic differentiation in 3T3-L1 cells as shown by decreased lipid staining with Oil-Red-O and reduction in adipogenic marker proteins including peroxisome proliferator-activated receptor-gamma (PPARgamma), and CCAAT/enhancer-binding protein-alpha (C/EBPalpha). Our bioinformatics analysis for the predicted localization of ISG12b1 protein suggested the mitochondrial localization, which was confirmed by the colocalization of hemagglutinin-tagged ISG12b1 protein with mitochondrial marker MitoTracker. In addition, ISG12b1 protein was exclusively detected in protein extract from the fractionated mitochondria by Western blot analysis. Furthermore, overexpression of ISG12b1 in adipocytes reduced mitochondrial DNA content and gene expression of mitochondrial transcription factor A (mtTFA), nuclear respiratory factor 1 (NRF1), and cytochrome oxidase II, suggesting an inhibitory role of ISG12b1 in mitochondrial biogenesis and function. Activation of mitochondrial biogenesis and function by treatment with PPARgamma and PPARalpha agonists in 3T3-L1 cells and cold exposure in mice induced mitochondrial transcription factors and reduced ISG12 expression. These data demonstrated that mitochondrial-localized ISG12b1 protein inhibits adipocyte differentiation and mitochondrial biogenesis and function, implying the important role of mitochondrial function in adipocyte development and associated diseases.