T umor necrosis factor (TNF)-treated 3T3-L1 adipocytes were used as a model for studying the effects of systemic inflammation on adipose tissue. Lipopolysaccharide-treated monocyte-conditioned medium or recombinant human TNF alpha induced morphological dedifferentiation of the adipocytes and led to loss of adipocyte specific gene expression. Gel shift, Southwestern and Western immunoblot analysis demonstrated that dedifferentiation was preceded by a decrease in the DNA binding activity and protein level of the transcription factor CCAAT/enhancer binding protein (C/EBP). Liver activating protein, a related protein that binds identical DNA sequences, increased during cytokine treatment. Both proteins activate specific enhancer elements located in the promoter region of many genes whose transcription is altered during systemic inflammation. Pulse-chase labeling followed by immunoprecipitation demonstrated that C/EBP is a rapidly turning over protein in adipocytes and that cytokine treatment led to a specific, time dependent decrease in its rate of synthesis. Because C/EBP binding sites have been shown to play an important role in regulating the expression of genes involved in adipocyte metabolism, we propose that the TNF-induced changes in the complement of transcription factors binding those sites may be important in the pathogenesis of inflammation-induced atrophy of adipose tissue.